Currency exchanges for a self-financed foreign exchange reserve
Between Febryary 2021 and December 2022 the Riksbank implemented currency exchanges of Swedish kronor (SEK) to euros (EUR) and US dollars (USD), with the aim of attaining a robust, long-term financing of the foreign exchange reserves.
The FX reserves was historically financed in two different ways: partly through the Riksbank’s own financing, which comprised of equity, banknotes and coins issued and deposits from the banks, and partly through loans in foreign currency on the international capital market via the Swedish National Debt Office. In January 2021, the Riksbank decided to replace the borrowed part of the FX reserves with self-financing via deposits from banks. This involved the Riksbank exchanging SEK for USD and EUR. In total, the Riksbank exchanged SEK for USD 14.5 billion and EUR 5.5 billion.
Exchanges were implemented at an even pace
The exchanges began on 1 February 2021 and were being carried out at a steady pace. In February 2022, the Riksbank decided to bring forward the date for when the exchanges were to be completed, to 31 December 2022 instead of 31 December 2023.
The exchanges were spread out evenly over time and were made in relatively small amounts to give them the smallest possible effect on the foreign exchange market and the krona exchange rate. This is because the exchanges did not fulfil any monetary policy purpose and were thereby not being conducted to affect the krona exchange rate. The exchanges were carried out with due caution and taking market conditions into consideration. This meant that the volumes could vary on individual dates, even though the Riksbank endeavoured to attain an even rate of exchange every month. The exchanges took place at the prevailing exchange rate.
Currency exchanges in EUR and USD
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