Geir H. Haarde, the Icelandic Prime Minister, said that hope was rekindled yesterday when the Icelandic krona was traded on the international market for the first time since the banking collapse in early October, according to MBL.is.
The value of the krona increased by an average of 8 percent on the interbank market in yesterday’s trading which New Glitnir, New Kaupthing and New Landsbanki were instructed to carry out.
A long term strengthening of the Icelandic currency would help bring stability to Iceland’s badly shaken economy and bring down inflation, currently running at nearly 20 percent.
Haarde told journalists that the krona had been vastly undervalued, and that the international market seems to agree.
On the separate issue of the desired pay cut for MPs and other elected officials; Haarde said he hoped a bill making such a move possible would be introduced today – meaning it could be debated in parliament as early as next week.
This is nonsense.
“Haarde told journalists that the krona had been vastly undervalued, and that the international market seems to agree.”
I’m sorry but so far I don’t see how the international market agree on that. Quite the opposite I think the international market see the krona as over evaluated right now.
Then a 8% rise in a currency market in a Day trade is just insane, I don’t see how this is something else than a bulltrap. It can’t be sustainable.
Finally, all this is not a floating currency. The rules are just smoke and mirrors.
Oh yeah, I figured. You cannot get foreign currencies anywhere with your Kronur. So I suppose it will never go down. Clever :) When is it that we’re going to have to queue for a slice of bread?
the krona got stronger? based on what? any things got any better? economic outlook improved? can someone smarter than me shed some light, please.
Well, if the European Central Bank still says that 1 EUR0= 290 isk, then what is the real value of the króna in the international market???
Which bank is telling the truth? a small bank of 300 thousand people or a huge bank with one of the strongest currency marked in the world and baked by 300.000 million people?
Which bank has more power to decide how much a currency is against the euro?
I am lucky that I got to sell all my euros in Iceland at 187isk, now the euro is 162 isk today… well, lets see what this crazy central bank of iceland is going to do,,, I think the best would be to transfer my money again to the account in euros at my icelandic bank, as soon as the euro gets something like 130 isk. because this artificial situation of the krónur well, who knows what the real price would be if the króna would be totally left to float and the markets would be totally open…
But, why does HE lie? Why is everybody lying? If that is not the exchange rate of the krona. We know that is undervalued, but that one is not the free exchange rate!
Today, ICB appreciates 12% ; it is the exchange rate, approximately, krona should have, 150-160 against Euro, but it is not exchange rate in the market: why are they lying to everybody? ; Why the media does not say the truth?
Somebody explained the trick!! They are doing the trick!!?
This is what we get here in Athens for the ISK against EUR:
Buy:304,50
Sell:284,20
http://www.naftemporiki.gr/markets/money_currtable.asp?id=mikra
P.S. ISK is on the 7th line (KOPONA I??AN?IA?)
Good news
Please correct me if I’m wrong but I believe the trick is: Tight restriction for buying foreign currency. So – no krona get sold -. However export is still running which leads to – Krona get bought -.
So Supply/demand < 0 = strengthen Krona
This is a typical Haarde farce. That wasn’t international trading at all. The króna has been traded internationally for weeks, but at very low rates (both in exchange rates and volumes of trade). When the ECB started requoting reference rates on 6 November, the króna jumped by 48.8% in a single day (although only to a rate of 205 to the euro, whence it has since declined).
Yesterday, the Icelandic FOREX market reopened “properly” for the first time in nearly two months. It has three market makers, all of them owned by the Icelandic government! The Icelandic government can choose any exchange rate it likes in the short term, so long as it has the powers to order the banks to sell at that rate! The European Central Bank refused to set a reference rate for the króna yesterday or today, given the smoke-and-mirrors farce in Reykjavík.
All that is happening is that the Central Bank of Iceland, instead of selling its reserves at 187 krónur to the euro, is giving up the chance of increasing its reserves by letting its potential foreign currency income be sold 160 to the euro. Trading is very thin at those prices, as even the Icelandic banks admit, so I guess Iceland isn’t losing TOO much money for Geir Haarde’s ego trip, not this time and not yet.
I’m visiting Iceland after Christmas (coming from UK). My bank will not sell me ISK today for some reason. Does anyone know where I can actually buy it?
Mind you, in response to my own comment, over €300 million euros in capital (or €1000 euro for every Icelander) fled the country between 15 October and 30 November, judging from trades in the currency auctions and Iceland’s official foreign trade *surplus* during the same period.
Petros, do you know if those rates are for cash kronas or deposits? Which bank in Greece?
The reason why the krona is strengthening so fast is that we are exporting a lot more now than we are importing.
Additionally there are restrictions in place on short term currency swaps and transfers.
+10.7% today, so it’s a total roughly 19%++ in less than 48h.
Is it possible that it’s a direct reaction of yesterday BCE’s cut?
Now the MIGHTY Icelandic krona now has strengthened
another 11% so far today!!!!!
KAUPA…KAUPA…KAUPA
SPEND…SPEND…SPEND
Ive already ordered my new Porche Cayenne Turbo and booked my holiday to Dubai this Chrismas…
Back to the Rock Star lifestyle!!!!!
SORRY…..ONLY JOKING
Lets just see were we are in 6-12 months from now.
Come on Iceland – you can get over this. Get the viking spirit going.
@Martel
The rates are for cash ISK, and they are an average of the main Greek banks trading the krona.
Out of curiosity I went today during lunch time to Alpha Bank and Agro Bank. They do not trade ISK for the time being.
National Bank (www.nbg.gr) proposed me 302,1 and 283,6 and of course the expected question: “What? Are you going to travel to Iceland? Are you crazy? It’s dark, bankrupted and cold”!!!!!!!!
Artificial trick continues:
E.U. time: 17:00h.
- ICB: ISK 161.54 / Euro ( Today ) .
- ICB: ISK 153.37 / Euro. ( EU time 17:00h ) .
- Yahoo Finance: ISK 285.14 / Euro ; Ask 329.52
- ECB: ISK 290.00 / Euro.
EU time, 17:00h, there is a new appreciation, trick, 5% respect to Central Bank of Iceland official exchange rate applied, today, September 5th.
September 1st: 187 / Euro ; September 5th, now: 153.30 / Euro. Krona has an artificial appreciation at 18% .
@koben, yes, that’s a very good quick summary of the trick; add in as well that the Icelandic banks have a national duty to make the currency rise, and can do it without too much risk in the current situation…
@Paul, you can always buy krónur at Keflavík airport, but the simplest would be to take your cashcard and withdraw from an ATM. If you have a UK Visa card, you can find the rates here:
http://consumer.visaeurope.com/travel/top10destinations/destinations_1/overview.html
They’re very similar to the Icelandic bank rates, once you’ve counted in the charge for a cash withdrawal on a Visa card.
@Martel, the site is from a leading Greek financial newspaper. I think it’s safe to assume that you can’t actually buy or sell notes at those rates, at least not in Greece. They’re equivalent to a mid-rate of 294 (with a 7% bid-offer spread), compared to the ECB reference rate of 290. I’ll be in Grimsby this Christmas, I’ll see how much a ISK1000 note costs me there!
@SPAIN, that’s an old one. The Central Bank of Iceland publishes its daily rates at 1045 GMT; the European Central Bank publishes its daily rates at 1415 CET. In winter, there’s a 2½-hour difference (3½-hours during the summer, when it wasn’t important). The rate from the currency auction of 3 December was EURISK = 187; today’s closing rate on the Icelandic “open” market was EURISK = 153.3, a 22% rise in the króna over two days.
As for the difference between CBI and ECB rates, you can view the graph here:
http://commons.wikimedia.org/wiki/Image:ISK_exchange_rate_Sep-Nov_2008.png
I’m tempted to add this week’s farce onto the end…
@Physchim62 – Somewhat poetic. I’ve been to Grimsby and it is indeed Grim (of a sinister or ghastly character; repellent). However I understand the Vikings were responsible for putting the ‘Grim’ into Grimsby!
http://en.wikipedia.org/wiki/Grimsby
Kalli said:
The reason why the krona is strengthening so fast is that we are exporting a lot more now than we are importing.
Additionally there are restrictions in place on short term currency swaps and transfers.
ALL YOU PEOPLE DONT LOOK SO DEEP THIS IS THE SIMPLY REASON WHY!!!!!!!
but the problem is if the krónur strengthens without goverment interferance or is a bulltrap or whatever, all you nei sayers here wont have anything to put iceland down for (unless you all bring up the past) or complain about. dont worry they are saying here that it wont last long so in a few weeks you can go back to putting iceland down..make your little lives happier :)
FISHY…..shopping trip is about due :D
i need to live the high life as i missed out on it the last few years! so did everyone i know.
lunch in paris, xmas shopping in new york. better then the planned kolaport shopping trip!
Hello Terry
Yeah fishy has been to GRIMsby…it sure is a lovely place ..to LEAVE!!!!
i think you are just afraid that when you look deep you see that the precious krona is still worth garbage. no one is believing this outside of iceland. how long is the denial going to last?
@fishy, or to put it another way, the only people legally allowed to sell Icelandic króna at the moment are Icelandic residents, and they are severely restricted in what they can buy with their foreign currency. If they manage to buy more foreign currency for their krónur, they are obliged to pass it through an Icelandic bank. And only government-controlled banks can sell foreign currency for krónur in Iceland.
This is the “market” that Doddsson’s mafia has set up: let’s see if it lasts out next week. In the mean time, good luck Guski!
I suggest everyone just take a deep breath…
The purpose of the currency restrictions is to protect as much as possible the short-term impact of refloating the currency. Real trading with the krona is now limited to importing basic goods, and other normal business related transactions between Iceland and other countries. No one benefits from wild currency swings at the moment (except maybe currency speculators), which could easily damage the Icelandic economy further.
In few weeks we are probably going to see the restrictions slowly lifted and hopefully this will result in true floating of the ISK. In the meantime just be patient and remember there are real people that badly need this to work.
Terry if you study the roots of the English language some more, you will also learn that “DIE” is not an anglo-saxon word, it was indeed something the great Vikings put in your vocabulary.
The old anglo-saxon word was derived from the present German “sterben”, but “DIE” is derived from the Scandinavian word “DÖ”
Atleast someone knew how to treat the English.
WAKE UP FISHY, DRIN AN EXPRESSO OR TWO, or is it that we are also having shortage of coffee in Iceland the reason for you to be sleeping and keep dreaming like that?
LOOK we can talk about the strengthening of a currency when such strengthening is effective in the open international market. So the strengthening of the krónur is artificial because it is of TOTAL ineffectiveness and influence in what the rest of the world countries think their money is worthy in isk. So, the strengthening of the króna is just something happening in the icelandic nationalized bank system.
Do you have monopoly at home? Well, it is like you take your monopoly money and you say that it is worthy 150 monopolys= 1 euros, then you go to a shop to buy and they say to you: “very nice”, but we don´t accept monopoly money not even if it is 300 monopolys=1 euro. BUT you can only buy if you have euros. Then you got upset and went to the foreign bank and they told you they have got many monopolies, but they will give you only 284 monopolies for each euro you bring them….
WAKE UP FISHY, HAVE AN EXPRESSO OR TWO, What we are discussing here is not “HOW” the Króna have got miracleously stronger, WHAT WE ARE DISCUSSING HERE IS IF THAT SUCH STRENGTHENING IS “REAL” and IF THE KRÓNA IS OR NOT A CURRENCY, NO ONLY DEVALUATED, BUT DEAD AND TOTALLY USELESS!!!
Oh, and by the way Terry the Grim in Grimsby is after a Danish viking king named Grim.
Probably the locals regarded him as being Grim :D And adopted the word, please refer to my earlier post regarding the “English” word “die”
THIS IS GOING TO END REALLY REALLY BAD!!! I wont be surprised if I see the allies taking over the country to restore peace and order after all the things that are about to happen next in this totally antidemocratic and dictatorial system established by these NEW CAPITALIST DICTATORS!!!
Wait until the CBI starts issuing banknotes of 50000 and 100000 and 500000 isk banknotes worth 5, 10 and 50 dollars…. THIS IS GOING TO BE LIKE IN ZIMBAWE!!! then you will see people with mountains of cash going to the supermarket to buy a slice of bread!!!
Lighting my cuban cigars with 5000 isk banknotes is going to be cheaper than using a match!! :D
@Kalli
Additionally there are restrictions in place on short term currency swaps and transfers.
In other words, everyone who has boatloads of krona (e.g. the holders of “glacier bonds”) is by law forbidden to sell. Ditto for foreign savers of icelandic banks.
And you call this free float? Geez. Forbid everyone who HAS surplus krona to sell it, using IMF money to buy ISK, and you are proud that it is going up? That it has “strength”?
I wonder when international community will fence you off and force you to live from cod only.
The reason Is simple, the gobermet is just trying to buy cheap euros from the people, becuse they know if they get it from outside its 290, so they are streaping off the euros from the people, so they can import cheap, but this can only work for so long, the krona is geting stronger because all of the ignorant people that are running to the banks to sell their euros and dollars, which means they are buying kronas, as long as you can not go to the bank and buy as many Euros or any other currency as you like, the krona is not floading. so any of this days we will wake up with the euro back to 200 or even much more. and it will be very soon they can not keep this farse very long, its a matter of days maybe weeks but not more, and from there we WIL NOT con back, they are just hurting much more the economy and the worst part they are attacking now dirctly the saveings of the people.
i think you all are jelous. that s all. iceland is still rich and people ( icelander) has a lot of money and krona will be strong again if you like or not. ok? scandinavia countries will never be poor. iceland is UNiQUE if u dont believe just come and see a piece of art of god. this endless beauty.
See this page , icelandic kronur is not weak at all. 150 per euro. not 290 or sth as you say.
Petros, Physchim62; thank you for the info. It seems to me the Greek banks give ‘reference quotes’, and don’t want to sell ISK at those prices.
I wonder how the ECB comes up with that rate (290 ISK/EUR)? There must be some trading going on, or at least hard quotes to buy & sell. Somebody willing to buy e.g. real estate in Iceland, would much rather buy their kronur at the ECB rate, provided that it is possible to transfer those ISK to Iceland.
Does anybody know, if there are restricions in Iceland on how much foreign currency a private citizen can purchase?
@Martel You can not buy any forigner currency at all, unless you are traveling outside the country and showing your plane ticket then you can buy currency for 500,000 ISK. (And they call this floading)I think you have more freedom to buy forigner currency in Cuba than in Iceland.
Swift transfer are allowed and unlimited.
BREAKING NEWS !!!!
Today for the first time in months prices down between 20-30% on Icelandic Fish Market
Must be down to getting paid less now the MIGHTY Icelandic krona is rising like a Phoenix from the ashes !!!!!
P.S
Gus-ty
Ive had at least 4 expressos today !
Swede said:
Oh, and by the way Terry the Grim in Grimsby is after a Danish viking king named Grim.
Probably the locals regarded him as being Grim :D And adopted the word, please refer to my earlier post regarding the “English” word “die”
I’m sorry Swede, my comments were not meant to offend. I was simply responding to Physchim62′s, comment – ‘I’ll be in Grimsby this Christmas, I’ll see how much a ISK1000 note costs me there!’ – by drawing attention to the irony of GRIMsby – the English meaning of the word Grim – and the Viking connection. This was confirmed by my providing the link http://en.wikipedia.org/wiki/Grimsby – stating that Grimsby was founded by the Dane-Mr Grim – as you also state.
As for your repeated comments wishing to draw my attention to the root of the word ‘die’ – ‘“DIE” is derived from the Scandinavian word “DÖ” At least someone knew how to treat the English.’
Well again – I’m sorry that you were offended – it was not intentional.
Until the end of the artificial “free” float and krona at a realistic level, no serious international investor will buy krona-denominated assets (e.g. a failing Icelandic company or Icelandic property).
The only rationale I can see is that conservative elements within government want to actively discourage such investors because that would mean the possibility of key Icelandic companies being taken over by foreign interests.
It’s a real pity because inward investment through equity ownership, not more lending, into Iceland is what the country desperately needs right now.
Easy said:
“The reason Is simple, the government is just trying to buy cheap euros from the people, because they know if they get it from outside its 290, so they are stripping off the euros from the people, so they can import cheap, but this can only work for so long, the krona is geting stronger because all of the ignorant people that are running to the banks to sell their euros and dollars, which means they are buying kronas, as long as you can not go to the bank and buy as many Euros or any other currency as you like, the krona is not floating”
I think this is exactly what they are doing. The entire Icelandic banking system seems to be a scheme primarily designed to force Icelanders into poverty. In the indexed and foreign currency loans are an outrageous rip-off and should have never been allowed.
Everybody seems to be a have ago expert on the rise and fall of the MIGHTY Icelandic Krona…
I beleive Alex the Ice News Editor , who reads ALL posts here decided to buy his British Pound on Monday at the rate of 222 isk= 1 gbp …OUCH !!
Has he beleived it would depreicate more.
now at ..174 isk= 1gbp
What does that say about what is read here, and our predictions?
I dont know or PRETEND to know the fate of the krona, as there are many positive and negative issues it has to face…
While i can respect everybodies comments saying the krona is worthless , what i DONT like is i feel this is what some of you actually WANT the krona to be worthless
I am very surprised why the English take so great interest in the rate of the Icelandic krona? I mean few of you are going to buy them anyway.
I had been planning on going to Iceland, and I asked my sister who works in a bank what the exchange rate was like.
She said we have “no idea”, I asked what rate they wold charge my Visa card, again she said “no idea”. I think this is very disturbing to say the least, and it is a situation I would wish no other country o be in.
Couldn’t people just take it easy and hope the situation will iprove for the benefit of all of us.
The is no reason to attack the good people of Grimsby they have nothing to do with Iceland, the town was in fact founded by the Danes.
Also the fact that the English word “die” comes from Scandinavian is absolutely not a fact I am proud of today, we all do things we later come to regret. And picking on Iceland, and finding joy in ordinary people losing all they have is also one of these little things we later regret.
The problem with the krona is only one example of the problem with having a globalized economy with multiple currencies. Not only should Iceland join a monetary union, most likely the European Monetary Union, but the world should learn from Iceland’s troubles and begin planning for the long range solution to the world’s global financial instability, which is a Single Global Currency, managed by a Global Central Bank within a Global Monetary Union.
The success of the euro shows that monetary union is the best way to ensure monetary stability. The primary problem with the euro and currencies of other monetary unions is the multi-currency system itself where currencies fluctuate in value against each other, but it’s still far more stable than national currencies. If 16 countries can use the same currency, why not 192?
In addition to eliminating currency risk, the use of a Single Global Currency would eliminate the current foreign exchange trading expense of
$400 billion annually, eliminate current account imbalances, eliminate the need for foreign exchange reserves (now totalling more than $3 trillion); and bring other benefits worth trillions.
The Single Global Currency Assn. promotes the implementation of a Single Global Currency by 2024, the 80th anniversary of the 1944 conference.
That’s only 16 years away. The world is moving toward a Single Global Currency through the creation of monetary unions in Asia, North and South America, Africa and the Middle East and the
expansion of monetary unions in West Africa, the Caribbean and Europe.
The Assn’s website is http://www.singleglobalcurrency.org. See the book, “The
Single Global Currency – Common Cents for the World.”
Morrison Bonpasse
President
Single Global Currency Assn.
Newcastle, Maine, USA
@koben, SWIFT transfers are only unlimited if you’re using them to buy goods or services: otherwise, in the best of cases, they’re limited to ISK 10 million per year.
@Martel, The ECB says it sets its reference rates after consultation with other central banks. There was obviously some semblance of trading during November, as the rate was changing every day (usually downwards).
1 EU = 290 isk is interesting, I wonder if I can buy hard isk at that bank…anybody want to do a swap deal if that is at all possible?
Something that many people have to understand is that what happened in Iceland between the 28th of Sept. and the 3Th of Oct. was the TOTAL and complet collapse of the economic system plus the almost 70% devaluation of the curency, not one of this two but BOTH. Plus a national debt of over 70 Billon Euros because of the collapse of the banking system, telling the people that the krona is getting strong now is like telling the people and putting it on the 7 o´clock national news that santa claus is actually real, you would have to be like 7 years old to belive it, there are some universal laws and common sense, if you hold a rock with your finger tips and release it, there is only one way it can go and thats south, if I spect it to go north I would have to be an idiot and if I tell you it actually went north im an idiot and a lier, now if you belive me, well, the trick is on you, the worst part of this is that the international comunity has allready notice that the icelandic goberment doesnt know what to do, “Russia will lend us money, no wait they wont, we wont recognize the dept with England, ok wait we will, we wont pay the forigner accouts, ok we will pay it, no we wont take a lown from IMF, wait yes we will take it, we will let the krona flotate no wait we wont ok we will no wait we actually wont but we´ll say we did” the worst part is not that the international comunity has notice that, but now we are trying to full them with the flotation of the krona, you know how many forigner investors Iceland will get? by the way thats the only thing it could rebilt this country. By the way not Icelandic by birth but by heart 16 years in this country a beautiful icelandic wife two beautiful icelandic kids, love this country and his people, but a crisis like this you do not recover from wednesday to friday, its just simply NOT POSSIBLE. Cheers.
CAN SOMEBODY TELL THE MINISTER OF ICELAND THAT ICELANDIC KRONA IS DIEING. PLEASE BEFORE YOU RUIN ALL THE GOVERMENT ECONOMY APPLY TO CHANGE OUR CURRENCY :(
So what’s the black market krona vs euro price inside Iceland? Is beer cheap? If I bring euro’s in, where can I get them exchanged @ the black market rate? Bars? Hotels?
Fishy,
Top marks for patriotism but you are also missing the point a bit regarding what others are saying on this blog.
No one is saying that the krona is “worthless”. No one wants it to be worthless.
It is just not worth as much the current rate suggests, and the consensus of most observers is that it would be better FOR ICELAND to have a *realistic* rate than a rate artificially set by the Icelandic Central Bank. Mis-priced currency helps no-one in the long run.
ATH
>>> Morrison Bonpasse
Your propaganda sounds more like NWO.
Why don’t you concentrate in putting your country back in track? Or you have no more future over there. US is loosing is credibility and interest since long now.
Keep preaching to Americans, though.
Fishy
>>> what i DONT like is i feel this is what some of you actually WANT the krona to be worthless
You are absolutely right; we can feel a lot of hate in this forum. People are hurt by Icelandic debts and some immigrants are just traumatized.
I think in general, all over Europe, people are sinking in darkness with the current situation and situation coming ahead. Not talking about US, which by the way the situation started much before the crash. Subprime started the house mortgages of thousands of American 9 months ago.
During those dark moments, as everybody know, a lot of people and political movements try to take advantage of this situation. I just hope people stay alive to charlatans…
Here the currency problem is very special for a westernized world.
The ISK will keep rising until the negative balance of the exporters who have been having income overseas return it to Iceland. Again the big corrupted companies in Iceland are winning there way… because they are transferring their money in the best rates looking the last 2 months.
We can’t know fore sure the real strength of the ISK. Until the limitations are not lifted (currency market trades, four government banks, limited currency exchange for individuals per month and per year), we can’t know for sure what the real situation is.
Some thing we can’t be sure is the Central Bank doing well his job now. Or is it wrong to take measures to try to protect your country? I don’t know how bad those preventions can affect the future of Icelandic economy.
Some thing is for sure, looking at the public and national debts, plus the interests of the new FMI loans and “country friends”, Iceland have at least until 2030 to gain their sovereignty back.
>>> Those are the real worlds every politician is forgetting to say in their peaceful speeches, try to control the citizens and once more taking the population for granted.
“I dont know or PRETEND to know the fate of the krona, as there are many positive and negative issues it has to face…
While i can respect everybodies comments saying the krona is worthless ,”
The current situation is far worse than the government fixing the rate. With that you get stability, ok it may not be a particularly good or bad rate.
Now, exporters have a currency nominally and artificially increasing .. BUT when it does eventually float there are 3.5Billion euro’s of Icelandic bonds that will flow out of Iceland. The Krona will crash again and anyone holding them will suffer.
This Sword of Damocles over the Krona will fundamentally undermine the currency and Iceland’s economy.
With the previous erratic and bizarre actions of the Icelandic government as a warning, nobody will want to invest or deal with Iceland without taking precautions.
Thanks for all who answered. The 290 ISK/EUR-rate is interesting, indeed. Just by chance, anybody here working in a bank at FX? Please check your Reuters or Bloomberg terminal, which banks sell ISK at those prices?
If there are no hard offers to sell, the ECB rate is equally faulty. Yet I believe it is closer to the reality than Reykjavik’s ‘managed float’-rate.
Comparing real estate prices between Iceland and West Europe/Scandinavia at the current official rate, one notices the Icelandic prices are quite high. This means, like Julia Set already noted, there will be no serious inflow of foreign capital into Iceland. Not for so long as this situation continues.
In the long term, either the official ISK rate has to weaken, or the real estate prices will have to go down. The collapse of housing prices creates problems of its own, and does not necessarily bring capital into the country, if the exchange rate remains dubious.
Swede said: again…..and again…. “Also the fact that the English word “die” comes from Scandinavian is absolutely not a fact I am proud of today, we all do things we later come to regret. And picking on Iceland, and finding joy in ordinary people losing all they have is also one of these little things we later regret.”
I have never expressed joy – but have expressed anger.
My regret was that ‘you’ were offended – not for what I said – but your misconstrued perception.
Your response is that of a curmudgeon. You think that to say – “‘“DIE” is derived from the Scandinavian word “DÖ” At least someone knew how to treat the English.’ is not an offensive remark? However, I’m content that it was permitted by the moderator – I am not so delicate.
My concern for your perception was a wasted endeavour.
I have read for weeks the numerous post re the ISK. I am abslutely NOT an economist but if what London says is true, does anyone see how this can all turn out in any way other than badly? What about an interim peg to the NOK or DKK or Euro? It seems to work in Namibia with a peg to the Rand and Belarus with a peg to the Ruble, though please don’t infer that I am rec. economic policies promulgated in Belarus!
Julia Set said: The only rationale I can see is that conservative elements within government want to actively discourage such investors because that would mean the possibility of key Icelandic companies being taken over by foreign interests.
It’s a real pity because inward investment through equity ownership, not more lending, into Iceland is what the country desperately needs right now.
Julia – leaving aside issues relating to IceSave – an initiator of outside interest – it is the observance of Iceland’s reaction to events and consequent decision making that intrigues interested observers.
Over recent years the UK has abandoned many traditional areas of indigenous manufacturing and business to foreign ownership. Has that been good? In the short term, in some instances, the answer may be -‘yes.’ Foreign manufacturers established a highly successful partnership, where indigenous ownership had failed.
In the longer term – times of financial crisis – the answer is less clear. When economies are ‘squeezed’ – do manufacturers take production away from the most productive plants in the UK in favour of defending homeland plant?
Elements within Iceland may choose to be conservative, in the wish to return to established norms. However, given the present position – can beggars be choosers?
Iceland attacks exporting companies again: celebration goes on; trick!
ICB Exchange rate; Latest fixing 5.12.2008: 161,54 against Euro.
ICB Exchange rate; 17:00h 5.12.2008: 153,30 against Euro. ( 5.10% ) .
ICB Exchange rate; Latest fixing 8.12.2008: 147,89 against Euro. ( 8.45% ) .
If celebration continues many days, Iceland will be very rich country again, richest!!!
When krona floats, fall will be more serious: danger.
And more celebration:
- ICB exchange rate; latest fixing 8.12.2008: 147,89 against Euro.
- ICB exchange rate; 17:00h 8.12.2008: 145,72 against Euro. ( 1.47 % ) .
- ICB exchange rate, Dec 3rd – Dec 8th: 20.90% against Euro.
- ICB exchange rate, Dec 3rd – Dec 8th, EU 17:00h: +22.10% against Euro.
- Yahoo Finance: ISK 291 against Euro ; ask ISK 336.
- ECB: ISK 290 / Euro ; December 1st.
@Terry,
It is local investors, not foreign investors, who typically move manufacturing abroad.
An international investor in a country would be interested primarily in local resources (e.g. cheap electricity), strengths (e.g. logistics) or a strong local franchise (say Hagkaup). They would be investing because they believe the business operation represents good value at its current price.
It was Icelandic investors who built their businesses through acquiring companies abroad and moved their headquarters to London.
It was British owned businesses who moved their call centers and manufacturing operations from the UK to India, China, Taiwan and Malaysia to save cost. Dyson and Doc Martens are classic cases.
There is currently no market to buy or sell deliverable ISK through UK banks. Should you wish to buy ISK for holiday money I suggest going to a broker. I can name a couple if required. If you want to sell ISK you need to hang on until there is stability. FT today suggests that other (non state owned) banks will market-make shortly.
OANDA Trading
Tuesday, December 9, 2008 09:36
1 Euro = 154.078 Iceland Krona
1 Iceland Krona (ISK) = 0.006490 Euro (EUR)
Interbank rate +/- 0%
This means:
You buy 1 Euro : 154.078 Iceland Krona
You sell 1 Euro : 141.217 Iceland Krona
You buy 1 Iceland Krona : 0.006490 Euro
You sell 1 Iceland Krona : 0.007081 Euro
Median price = 141.217 / 154.078 (bid/ask)
Estimated price based on daily US dollar rates.
Tuesday, December 9, 2008 09:36
1 US Dollar = 120.084 Iceland Krona
1 Iceland Krona (ISK) = 0.008327 US Dollar (USD)
Interbank rate +/- 0%
This means:
You buy 1 US Dollar : 120.084 Iceland Krona
You sell 1 US Dollar : 110.084 Iceland Krona
You buy 1 Iceland Krona : 0.008327 US Dollar
You sell 1 Iceland Krona : 0.009084 US Dollar
Median price = 110.084 / 120.084 (bid/ask)
Minimum price = 107.390 / 117.390
Maximum price = 115.400 / 125.400
ICB. Des. 9, 2008 09:36
USD Buy. 114,64
USD Sell. 115,18
USD Median. 114,91
Eur Buy 147,30
Eur Sell. 148,39
Eur Median. 147,48
ICB Median Rate Des. 9, 2008 09:36 111,7
So, what planet are we on?
A planet that will probably implode early in 2009. FX mangeent will work for a period, but as pointed out, the old bank debtors and Glacier bond creditors will want recompense (probably a huge chunk of equity in the new banks). With the precipitous decline in the price of aluminium, tourism decline (no point in going on a cheap Iceland holiday if you are unemplyed in the Uk – see Keflavik footfall drop for Nov 2008)and services, the Krona may only have one trajectory longterm. Factor in a wave of domestic commercial bankruptcies next year and the possible end of a number of Icelandic trophy companies by the end of Q1 FY09, then the Krona is not the only problem. A quick overnight flit to the Euro, external management of the central Bank and economy and the use of western corporate governance standards sounds radical….but we may be getting to that point.
@ FX-Trader
Could you please supply the names of any Traders supplying ISK. I shall be visiting Reykjavik over the New Year. Thanks
The central bank guy David is so obsessed to his strong ISK illusion, now using this radical currency control, suddenly seemed to make the krona stronger..
He is deceiving himself and the whole nation, shutting himself in his little dark room to fix the currency in this way..
May god help Iceland, get rid of the incapable, find the country some wise people to lead and rule!
Ohh God!! Central Bank of Iceland has gotten tired to improve exchange rate of the kronur this afternoon!!!!
ICB: ISK 143,76 against Euro. ( Absolute unreal rate, crazy !! ).
ICB: ISK 147,50 against Euro; EU time, 17:30h. ( devaluation 2.50% ).
Governor of the Central Bank bought expensive neckties today, and krona was devaluated this afternoon!!
¡Vivan los Islandeses!
@amy
The Central Bank isn’t participating in the currency market. It might if the currency starts to fluctuate wildly but it hasn’t so far since the float.
‘Float’ .. you have to laugh.
Its basically four government owned banks selling Krona to a captive market.
It seems no banks outside Iceland will deal with the Krona and the ECB has removed the price chart. Its set at 290 as a footnote on the List of Exchange rates
http://www.ecb.int/stats/exchange/eurofxref/html/index.en.html
If you try to download the rates, the ISK isn’t there. Its no longer a currency the ECB recognises
http://www.ecb.int/stats/exchange/eurofxref/html/index.en.html#dowloads
Disney make their own money – the Disney Dollar – which are now more widely convertible than the Krona.
@mrk
The central bank made the rule….
VIVA EL CORRALITO ISLANDÉS. Hey guys, this is not a “float” this is the first european “corralito”. Corralito is the word used for the limitations impossed by the Argentinian govern. Limitations of all kinds in how people move the money and all that. I am not glad to say this, but things seem to go very bad now and I don´t see any strong guaranty for them to go anybetter. I called my bank in Spain, the bank where I reached to send all the money I had in this country. I asked them the following:
-I have a visa electron debit card issued at your bank (the spanish bank). How many euros do my bank get from my account anytime I take from ATMs or pay for 1.000 isk in Iceland?
- The answer was this: ” We will take 5.20 euros from your bank account as 1 euro is worth 192.22 isk” (this was today 9th of december.
So what is happening here? I got to buy euros for 153 isk and send them to Spain and now I use my card here and they are worth 192.22 isk?
Can someone explain me this? Because I also called VISA in Spain and they told me the same. That the amount of euros to be taken from my account for 1000 isk is around 5.20 euros. And that the euro is 192 isk. And it is not because of the days you wait until your movements appear to visa in Spain… They actually told me that the euro is going to be more expensive from tomorrow as the banks are getting in line with the prices stipulated by the European Central Bank ( 1 euro= 290isk) and that until the central bank does not announce anything different that is the rate of reference all the banks are in line to follow…
Can someone explain to me what kind of icelandic “correlito” are we experiencing here?
What is happening in this country is bad, but it is even worse all the tricks the icelandic central bank is doing…. What is going on? are they just putting this artificial price of the króna because is christmas ? or is because they are scared of the people getting them out of the power by force? What will happen in january?
MrK,
you are right. It is not participating, there is no need to. Iceland government has simply decided that any ISK sellers are enemies of the state and are thus forbidden in participating in ISK market. So nobody who has ISK is selling in meaningful quantities. Offshore exchange rate is still somewhere in the 300s, as far as I know.
But, as iceland government would like to convince you, all is good, all is good, krona is strong…
The next song representing Iceland in eurovision ( if they get a cultural grant from the EU for covering the costs) will be: “El correlito, el correliiiiiiiito, el correliiiiito de mi amiguito Daviiiiiidddd, … i sigue así…. Pedazo de pecadolllllll,,,, confíesate!! Y luego aparecerá David diciendo: ” He pecado mucho, de palabra de obra y de omosión, por mi culpa, por mi culpa, por mi gran culpa!!! necesito castigo!!!” Y luego aparecerá la Silvía Nótt ( la peor cantante dl mundo solo superada por su copatriota Björk) diciendo: “te vas a enterar” llevándolo de una correa como su perrito y castigándolo con el látigo… HAHAHAHA, qué espéctaculo, no puedo, AYUDA, que no puedo, ke fuerte prefiero la muerte…
To Peter – London:
“If you try to download the rates, the ISK isn’t there. Its no longer a currency the ECB recognises
http://www.ecb.int/stats/exchange/eurofxref/html/index.en.html#dowloads
Disney make their own money – the Disney Dollar – which are now more widely convertible than the Krona.”
Everybody that knows something about icelandic economy, also knows difficult situation of the economy in Iceland: it was a precipice and, it is in comma now, and it is necessary to revive it; I think, jokes and scorns are not necessary. Iceland was a richer country than yours many years, even Ireland. Perhaps you cannot swallow this thing. Also everybody knows your icelandic antagonism.
To Gus ! :
“The next song representing Iceland in eurovision ( if they get a cultural grant from the EU for covering the costs) will be: “El correlito, el correliiiiiiiito, el correliiiiito de mi amiguito Daviiiiiidddd … ”
It is not necessary to have money to participate in Eurovisión! People says, it is necessary to have money to buy the triumph! Eurovisión triumph? No, thanks!!
“El correlito, el correliiiiiiiito, el correliiiiito de mi amiguito Daviiiiiidddd, … i sigue así…. Pedazo de pecadolllllll,,,, confíesate!! Y luego aparecerá David diciendo: ” He pecado mucho, de palabra de obra y de omosión, por mi culpa, por mi culpa, por mi gran culpa!!! necesito castigo!!!” Y luego aparecerá la Silvía Nótt ( la peor cantante dl mundo solo superada por su copatriota Björk) diciendo: “te vas a enterar” llevándolo de una correa como su perrito y castigándolo con el látigo… HAHAHAHA, qué espéctaculo, no puedo, AYUDA, que no puedo, ke fuerte prefiero la muerte…”
Gus, sleep the drunkenness; tomorrow, you will see the most beautiful dawn!
@Gus, that’s a really strange ratio from youe Spannis bank :), check here and don’t write bullshit http://corporate.visa.com/pd/consumer_services/consumer_ex_results.jsp?from=ISK&to=EUR&rate=0.0
First minute, makes me remember when I was a small “devil” !! They are the children who will make the new Iceland, a rich country again!
Congratulations for this video.
http://www.mbl.is/mm/frettir/sjonvarp/?fl=0;media_id=21525;play=1
@Gus, that’s all true, I called to my bank in Russia, and they inform me ratio is today 5,17 for 1000 ISK, – Iceland has never been so cheap for tourist – Thank you David
“They actually told me that the euro is going to be more expensive from tomorrow as the banks are getting in line with the prices stipulated by the European Central Bank”
GUS, the situation can’t stay like that. At least not for long, as the ECB does not quote ISK anymore. In absence of an over-the-counter market for ISK, the banks have to get in line with the central bank in Reykjavik.
LISTEN slewa, that is the rate offered by VISA international?? because VISA in iceland http://www.valitor.is says today 1 EUR= 151 isk…, It depends of the rate YOUR BANK (where you have your money) sets, if you call VISA in Spain they will give you a much different price. Believe me Slewa, I am totally confussed, Which VISA is saying the truth? the icelandic, the spanish, the american? What is going on???
Well, anyways, the artificial strength of the króna served me very well to send almost all my millions to Spain at the exchange rate of 147 isk… And, as I said, when the real price of the króna comes up in the international market it will be so nice to use my EUROS in Iceland. If the króna keeps around 147 per EURO then is ok, but I don’t think is going to get stronger than that in the short nor long term. The great risk is still there and everything points for the króna to weaken further until “she” reaches her real price and stabilize around that. We will be lucky if we can see the króna around 190 per euro in the next year. However, as I said, everyone is expecting the EURO to be around 250isk for a long time… Just let´s wait until our dear friend David opens the Icelandic CORRALITO. Then we will dance all together!!!
If the Króna is so strong as some say here then, WHY DON´T THEY LET IT FLOAT COMPLETELY AND NATURALLY IN THE MARKET??? WAKE UP!!! don´t you see this is just a theater??
Everyone is trying to take their moneys out of Iceland and convert their krónurs into dollars or euros… Wait until they open the gate… THE CASH FLOW WILL BE MEMORABLE!!! I am just waiting for that to happen to be able to contemplate such an historic moment.
I grew up in a farm, when a cow, horse or dog gets really sick and has no cure the best thing is to give it a shot in the head… I know, sounds horrible, but why letting him spend its lasts days suffering like that? Well the same is happening to the Icelandic Króna, is sentenced to DEATH, but David just want to keep her alive. No matter how the icelandic nation suffers…
Then there are people like him claiming that this country will be rich again, living of old dreams of a strong icelandic króna and economy that isn´t anymore what it was… This country is SURVIVING thanks to the “lefts overs” other nations. DON’T YOU SEE THAT YOU ARE SURVIVING ON INTERNATIONAL AID?? And this is only the beginning, during the next months you will see more aid coming, more loans to the country. When David finish his work and has totally smashed and destroyed any icelandic company, when the thousands of men have already left, when people angry get the govern by force, when international forces come to Iceland to restore order, when all that happen then everyone is going to see how useless are the things that they are doing now…
LETS STOP LIVING OF OLD DREAMS AND LETS FACE REALITY, ICELAND IS A HEAVILY IN DEBT POOR COUNTRY LIVING ON FOREIGN AIDD. ICELAND HAS BEEN DOWNGRADED ECONOMICALLY BY THE MAJOR ECONOMIC AGENCIES IN THE WORLD ( INCLUDING THE IFM). NO ONE, INSTITUTIONALLY AND PRIVATELY SPEAKING) HAS ANY CONFIDENCE IN THE KRÓNUR, NOR IN THE FUTURE OF THE ICELANDIC ECONOMY. WAKE UP!!!!
I did forget this:
My bank is one of the four main banks of Spain, and they have said:
- They do not buy icelandic krona. ( so, if I am going with my cash, icelandic banknotes, they will not buy this currency to me ) .
- They do sell icelandic krona at 165,14 against Euro. ( If I am going to my bank, they will sell icelandic krona cash ).
EU time, 13:00h., September 10th 2008.
Martel said:
“GUS, the situation can’t stay like that. At least not for long, as the ECB does not quote ISK anymore. In absence of an over-the-counter market for ISK, the banks have to get in line with the central bank in Reykjavik.”
I see, the worlds smallest currency and Central Bank* is going to dictate the value of the worlds biggest currency, central bank and economy.
*And the smallest currency’s country is bankrupt, vastly in debt and having an economic crash.
Most be the Icelandic way, well King Canute was Danish.
UN, DOS, TRES !!! EL CORRELITO OTRA VEZ!!
The icelandic CORRELITO is the worst correlito ever!!!
IMO the ratio is like in valitor.is or link I put before, BUT Sedlabanki pays the differnce between REAL ISK value and the ratio on visa sites :)
It’s been 3 days now that the Krona is getting weaker. -3% today.
Are we experiencing a correction?
Are we finally realizing
that we were just having a market euphoria?
Are we finally getting back the 250 TWI everybody was expecting
>Are we experiencing a correction?
The redemption of the Treasury bond RB08 next Friday and an associated interest payment of ISK 8.5 bn is a likely cause. Foreign investors are thought to own 80-90% of the total outstanding amount. As the foreign exchange rules do not restrict the transfer of coupon payments, we expect the majority of these ISK 8.5 bn to hit the FX market.
http://www.landsbanki.is/english/markets/research/dailyeconomicbriefing/?NewsID=13518
Last 30 hours, 6% devaluation, and exchange rate 152,10 against Euro.
17:00h, EU time, Decemb 10th.
Peter – London said:
>Are we experiencing a correction?
“The redemption of the Treasury bond RB08 next Friday and an associated interest payment of ISK 8.5 bn is a likely cause. Foreign investors are thought to own 80-90% of the total outstanding amount. As the foreign exchange rules do not restrict the transfer of coupon payments, we expect the majority of these ISK 8.5 bn to hit the FX market.”
What exactly does this mean in a mor popular lenguage? is this something possitive for the krona or negative?
Well if 80-90% of a total of ISK 8.5bn is owned by foreign investors, and if there is a way with the Central Bank given rules to exchange this amount, I suppose that 99% of those foreign investor will be looking for ways to sell ASAP.
Hence the Krona will plummet yet again.
But this was really something everyone was expecting when the krona was about to float again. Japanese banks and Hedge funds are still holding a shit load amount of ISK and so far the only thing that prevent them to sell are the Sedlabanki rules.
Now the debate is on why on earth would they create strict rules that should apply for a couple of months? Do they really think that it will help regaining foreign investors confidence in such a short time?
I think this is just delaying something that is meant to happen.
Foreign investors wants to get rid off their Krona as quick as possible, no matter what. The recent appreciation, to me, was also a good thing in favor of the selling (having eventually less losses than expected).
Maybe what they want is spreading the devaluation of the Krona along the year to help the country coping and getting use to it?
I’m not sure….
“What exactly does this mean in a mor popular lenguage? is this something possitive for the krona or negative?”
It means that there will be a some people who can sell the Krona for Euro’s – foreign holders of Bonds who receive interest payments. Everyone else (Icelandic exporters etc) are forced to buy the Krona and sell any Euro’s to the Icelandic government. This is the reason for the currency controls – to keep up interest payments on these bonds. There is no confidence in the krona, as the holders of the bonds (total value 3.5Billion Euro) are converting the interest payments back to Euro’s immediately.
If they could, foreign investors would probably immediately dump the bonds and thereby the Krona. The Government is instead paying the interest on them and preventing the bonds from being sold. They are high interest though (around 15% in some cases, I think) so its going to require a lot of Euro’s just to keep the Krona above water.
How much depends on exactly how much foreign currency can be earned (minus what is required for imports) over the next few years, to compensate for the selling pressure by the bond holders