bond.is
Central Bank foreign currency auctions established
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The results of the Central Bank of Iceland's (CBI) second foreign currency auction for owners of offshore ISK were broadly in line with the results of the first auction, and it appears as though a pattern is being established for this aspect of capital account liberalisation, as regards price, volume, and frequency of auctions in the near term. This must be considered a positive development, although it is clear that more will have to be done in order to unwind non-residents¿ ISK positions so that the capital controls can be lifted.
Bids submitted in the auction totalled ISK 52.2 bn, and accepted bids amounted to ISK 14.9 bn, well in line with the CBI's objective. The minimum price of accepted bids was ISK 215 per euro, as in the first auction. The average price was somewhat lower this time, however, or ISK 216.33 as opposed to the previous average of ISK 218.89. The CBI accepted all bids above the minimum, and it accepted bids equal to the minimum price on a pro rata basis, at about 44% of the original amount.
It is worth asking why the bank chose to accept the latter group of bids only in part rather than raise the total amount of accepted bids. It could be that it wants to keep the supply under control in the latter part of the transaction, which is planned for August, when pension funds are expected to buy indexed Treasury bonds for an amount equal to that received by the CBI in yesterday's auction, and to pay for them with foreign currency. This will replenish the CB's foreign reserves in an amount equal to the foreign currency paid out for the offshore krónur in yesterday¿s auction.
Depositors dominate
As in the first auction, the Treasury offered to accept payment for the foreign currency in Treasury bills and bonds maturing prior to 2013, at terms broadly in line with market terms. According to this morning's announcement from Government Debt Management (GDM), no one exercised that right yesterday. The accepted bids appear to have been from offshore ISK owners that hold their currency in deposit accounts. This group of non-resident ISK owners is considered more impatient than those that own Treasury securities and is therefore likely to agree to a higher price in euros than the latter group. The lower total amount of bids in this auction could mean that the oft-referenced overhang - that is, the offshore krónur wishing to exit the ISK at the first opportunity - was reduced by the first auction.
Positive step, but more is needed
As mentioned earlier, the CBI has already announced that the latter part of yesterday¿s step will take place after the first week of August. The next auction for holders of offshore krónur is planned for September. Assuming that the measures scheduled for August are successful, approximately ISK 28 bn will have changed hands by the time that step is complete, and will have been transferred from offshore ISK owners¿ deposit accounts to indexed Treasury bonds owned by the pension funds. But more is needed, as the CBI estimated roughly this past winter that impatient investors were holding some ISK 155-185 bn. It is not out of line to assume that the pension funds will contribute foreign currency amounting to between on-fourth and one-third of that amount, but clearly, it will be necessary to put other parts of Phase I of the liberalisation strategy into action so as to make an adequate dent in offshore ISK holdings and prepare the ground for general removal of controls.
leggo oggi su BOND,is , se non sbaglio mi sembra di capire che hanno fatto una nuova asta al prezzo di 218 e ne prevedonon un'altra in agosto
la mia banca INTESA nulla mi dice se non addebitarmi spese e bolli sul conto deposito infruttifero , qualcuno più esperto di me cosa ne pensa di questa nuova asta --------????
