Posts Tagged ‘Currency’
Tuesday, March 13th, 2012
The Icelandic parliament late last night changed the law on currency exchange restrictions to close a loophole which had been discovered. Lawmakers were careful to keep their intentions secret until after the markets closed yesterday afternoon.
The bill was approved with 25 votes against 12 and three MPs did not vote. 23 MPs were presumably therefore not present at the late night session.
Vísir.is reports that the initial bill presented was deemed by parliamentarians to be too harsh and changes were made to it after its second reading to allow cash deposits held in foreign currencies and owned by foreign investment firms or the Central Bank of Iceland to be exempt from the tightened regulations. Such deposits are defined at the level they stood at at end of day on 12th March.
Alþingi MPs were surprised to be called to unscheduled parliamentary party meetings to discuss the secret bill they had not been told about, as soon as the currency markets closed at 16.00.
It is assumed the goal of the act is to stem the ongoing recent decline in the value of the Icelandic króna. The closing of the loophole in the exchange controls comes at an interesting time, when officials have already begun the slow process of removing the restrictions altogether.
Tags: Althingi, Currency, Krona, Mbl
Posted in Business, Iceland, Politics, Society, bill, controls, exchange, featured, forex | No Comments »
Friday, March 2nd, 2012
The Canadian ambassador to Iceland says that the authorities in Ottawa are willing to start talks that could see the Canadian dollar become the national currency of Iceland – if that is the will of the Icelandic people.
The ambassador, Alan Bones, will give a short speech at tomorrow’s meeting of the Progressive Party which will discuss the unilateral adoption of another currency to replace the Icelandic króna. RÚV reports the ambassador as saying that his government is ready to discuss Iceland’s adoption of the dollar if the Icelandic government requests such talks.
He said that an eventual treaty would try to accommodate the best interests of both governments; adding that if Iceland adopted the Canadian dollar unilaterally its government would obviously have no say on monetary policy – making it in the country’s interest to negotiate a treaty beforehand.
There are many examples of countries unilaterally taking on the currency of other nations – although no country has chosen the Canadian dollar to date.
Alan Bones says it falls to the Icelanders to discuss the matter internally and decide if the benefits of a stable currency outweigh the negatives of losing control over monetary policy and losing the ability to deal with economic shocks, as in autumn 2008, by devaluing their currency.
There has been serious discussion in Iceland about ditching the króna since the crash and one of the key reasons for Iceland’s EU application is the possible eventual adoption of the euro. Others have been calling for the country to take up other currencies, and the Canadian dollar has been a popular choice. Still other voices maintain that the expense and instability of the króna are inconveniences worth enduring for having control over monetary policy and the ability to devalue.
Tags: Ambassador, Canada, Currency, Krona, Mbl
Posted in Business, Iceland, Politics, Society, dollar, featured, framsóknarflokkurinn, monet | No Comments »
Monday, February 27th, 2012
The exchange rate of the Icelandic króna has been weakening steadily since the start of the year and the exchange rate index has not been higher for nearly two years. An economics professor says that the outlook on inflation is not good.
Since the 1st January the króna has weakened by four percent and the exchange rate index now stands at 226.86 points; meaning that each US dollar currently costs 124 krónur, the euro is at 166 krónur and each pound sterling costs 196 krónur. The króna was at its weakest in autumn 2008 shortly after the banking crash, when the exchange rate index hit 250 points. At that time wide ranging exchange restrictions were applied, and they are still in force today.
RÚV reports that the Central Bank of Iceland decided at the beginning of this month to keep interest rates unchanged despite calls from two of the three members of the monetary policy committee for a rise of 0.25 percent. Annual inflation is currently running at 6.3 percent.
Economics lecturer Ólafur Ísleifsson says that recent developments do not give cause to be positive – saying that a four percent weaker króna is a disquieting development.
Ólafur says he fears the development will drive inflation, undermine purchasing power and put additional pressure on debtors. The government, and especially the Central Bank, must now explain in detail how they intend to reach their inflation and exchange rate goals, he says.
“It raises a lot of questions, especially in light of the fact that strict and wide ranging currency exchange restrictions are in place. A variety of explanations have been tabled but if it continues as expected it is not exactly a bright outlook,” Ólafur told RÚV.
Central Bank of Iceland governor Már Guðmundsson said at the beginning of the month that the reason for the weakening currency was, among other things, the payment of interest by the government, local municipalities, and companies in foreign currencies. Ólafur claims that is not a good enough explanation because a weaker currency is good for exporters and exporters’ increased revenues should serve to balance the exchange rate. The question of why the króna has slipped so much in the last two months still has yet to be answered, Ólafur claims.
Analysts at Íslandsbanki said this week they expect the króna to strengthen again by the start of spring as the tourism and fisheries sectors start to pick up.
Tags: Currency, Inflation, Krona, Mbl, Money
Posted in Business, Iceland, International, Politics, exchange, featured | No Comments »
Thursday, February 23rd, 2012
Temporary capital flow out of Iceland is the reason for the króna’s marked depreciation in the last few days, according to an analysis expert at Íslandsbanki.
A possible cause for the unusual level of outward capital flow is the payment of foreign debts by businesses or municipalities.
The Icelandic króna exchange rate had been stable for weeks until several days ago when it started losing ground and has now lost 1.5 to 2 percent of its value. That is a very significant short-term change, according to Jón Bjarki Bentsson, an analyst at Íslandsbanki.
“Despite the fact that there are exchange controls on the movement of capital and sizeable blocks stopping the transfer of capital not directly related to trade, it is of course permitted to buy currency for the import of goods and services and also to pay interest and payments on foreign loans,” Jón Bjarki told RÚV. In winter the inflow of capital is lower than in summertime, not least because of the flow of tourists which is very seasonal. If there is a period when there are more interest payments, someone is paying off foreign loans, or imports take a leap then currency takings from exports are not enough to cover it.”
Jón Bjarki is of the opinion that the exchange rate will strengthen as the year progresses.
“When the spring arrives and currency earnings start flowing more, both from the winter fishing season and not least from tourists, then pressure on the króna should lighten and we have been predicting that it will strengthen when the spring comes, but until then it could go either way,” Jón Bjarki said.
Tags: Currency, Islandsbanki, Krona, Mbl
Posted in Business, Iceland, International, Society, exchange, featured | No Comments »
Thursday, May 13th, 2010
Peter Guestyn, 60, presented bank staff with "silver certificates" which he claimed were worth a million dollars each.
Tags: Bank Staff, Banks, Businessman, Currency, Million Dollars, Silver Certificates
Posted in Iceland | No Comments »
Tuesday, March 9th, 2010
“I think what is happening in Iceland proves that our own currency is very beneficial to our needs. You don’t have to go far back to see that the currency developments have increased the competitiveness of Icelandic businesses and industries”.
- Steingrimur J. Sigfusson, Finance Minister of Iceland two years after an economic collapse all but wiped out the Icelandic financial sector after years of “hot money” flowing into the country because of exorbitant interest rates imposed to battle inflation.
He is crediting the arsonist for bringing a bucket of water to the fire.
What he is really celebrating is Iceland moving one step closer to the developing world and improving our “competitiveness” through a worthless currency. Never mind the comparative loss of wealth to citizens in the developed world.
A classic argument for not joining the EU and improving the livelyhood of Iceland’s citizens.
Related posts:
- Thanks A Bucket – But Stiglitz Wants IMF Out Of Iceland
- Finance minister wants to abolish price-indexation
- UK Crackpot: McDonald’s flight shows Iceland’s policy works
Tags: Arsonist, Bucket Of Water, Citizens, Competitiveness, Crackpot, Currency, Developing World, Economic Collapse, Exorbitant Interest Rates, Finance Minister, Financial Sector, Hot Money, Iceland, Imf, Indexation, Inflation, Livelyhood, Mcdonald, Stiglitz
Posted in Iceland, Market | No Comments »
Monday, February 1st, 2010
House searches of companies and four homes were undertaken on Friday by around 30 employees of the economic crime department of the National Commissioner of the Icelandic Police, the Central Bank of Iceland, the Icelandic Financial Supervisory Authority and other institutions due to suspicion of currency fraud.
Tags: Bank Of Iceland, Central Bank Of Iceland, Currency, Economic Crime, Financial Supervisory Authority, Fraud, Institutions, National Commissioner, Suspicion
Posted in Iceland | No Comments »
Tuesday, January 5th, 2010
Fitch Ratings has taken the decision to reduce Iceland’s long-term foreign and local currency issuer default ratings to ‘BB+’ and ‘BBB+’ from ‘BBB-’ and ‘A-’.
A spokesman said the company had been waiting for the Icelandic president’s decision on the Icesave Bill before making a decision.
Tags: Bb, Bbb, Credit Rating, Currency, Fitch Rating, Fitch Ratings, Iceland, Spokesman
Posted in Iceland | No Comments »
Monday, December 28th, 2009
Mats Josefsson, a Swedish economics advisor to the government in restoring the financial system, says he cannot see how Iceland can maintain its currency, the ISK, in the future, visir.is reports.
Tags: Currencies, Currency, Economics, Faith, Iceland, Isk, Visir
Posted in Iceland | No Comments »
Monday, December 7th, 2009
Service takings from foreign tourists in Iceland have shot up over the last year, with each visitor now spending an average of 50 percent more than before.
The last quarter of 2008 and the first three quarters of 2009 saw spending by foreign visitors to Iceland increase considerably when counted in Icelandic kronur.
The figures were reported in Islandsbanki’s morning briefing, saying that it is clear tourists are enjoying the low rate of the Iceandic currency and the increased purchasing power that brings. From this point of view, the Icelandic tourist industry and other services are benefiting from the weakened exchange rate.
The average tourist visiting Iceland is now spending around ISK 170,000 (USD 1,400) during their trip.
Tags: Currency, Exchange Rate, Iceland, Icelandic Krona, Last Quarter, Point Of View, Purchasing Power, Takings, Three Quarters, Tourist Industry, Tourists
Posted in Iceland | No Comments »
Wednesday, November 18th, 2009
Fridrik Jonsson shows two pictures on his blog today that challenge the wisdom of applying economic theories to large economies and small as if there were no difference.
The first one shows inflation from January 2001 – October 2009.
The second one shows the development of CB interest rates in the same period. Notice a trend?
Those of us who have been paying off loans in the last 8 years or so have always experienced a negative effect when the Central Bank has hiked up its rates.
The problem is a volatile currency in an open and very small economy. The outcome is going to be a lot of hot money flowing into the country and disappearing the same way if rates are lowered. Add the factor of consumer price indexation and you have a vicious circle where the rise in monthly payments for a business means a higher price for the consumer and workers constantly needing more wage hikes. All adding up to a situation where inflation keeps biting you in the arse.
Disastrously failed economic management anyone? Unfortunately, the people now in charge might not have learned anything. Or worse, maybe they are just locked in because of the failed ISK.
Tags: 8 Years, Arse, Cb, Consumer Price Indexation, Currency, Economic Management, Economic Theories, Economics, Economy, Hot Money, Inflation, Interest Rates, Isk, Loans, Notice A Trend, Vicious Circle, Wisdom
Posted in Iceland, Market | No Comments »
Wednesday, October 14th, 2009
Although I appreciate the brilliant contribution Joseph Stiglitz has made to economics, I still find it cringeworthy whenever I hear someone thank the flexible Icelandic currency for things “being better than they could have been”.
It is sort of like thanking the arsonist for bringing a bucket of water to the fire he started himself.
Stiglitz, speaking in Copenhagen is still vary of the IMF’s involvement in Iceland. Its plans are likely to lead to increased unemployment. “The fund’s fuse is short, which means that if states don’t do what it proposes, then it will delay its actions. It is a negative signal and that is why many are now considering whether Icelanders should thank the IMF for stepping in one year ago and tell it that there is a balance in the system, there is no emergency situation and as a democratic state we need the citizens to get together and discuss further action. There are many things at stake but full employment is the most important.”
Stiglitz says that the huge budget cuts demanded by the IMF would lead to higher unemployment in Iceland. “They say that the cost of obtaining trust is to have large reserves, the cost of the reserves are high interest rates. The cost is equivalent to the budget cuts in health or education and Icelanders should ask themselves whether it is worth it.”
Tags: Arsonist, Bucket Of Water, Budget Cuts, Citizens, Copenhagen, Currency, Democratic State, Economics, Emergency Situation, Full Employment, Fuse, High Interest Rates, Iceland, Imf, Joseph Stiglitz, Lead, Many Things, Negative Signal, Stake, Unemployment
Posted in Iceland, Market | No Comments »
Saturday, September 26th, 2009
Icelanda s central bank left the benchmark interest rate unchanged as policy makers try to support the currency before capital restrictions are scaled back later this year.
Tags: Benchmark Interest Rate, Currency, Iceland, Krona, Leaves, S Central
Posted in Iceland | No Comments »
Thursday, August 6th, 2009
The Central Bank of Iceland announced yesterday that the country’s harsh capital controls will be gradually lifted beginning in November, ending the current ‘managed float’ of the fragile Icelandic krona.
It is estimated that there are some USD 5 billion of foreign investments stuck in Iceland, half of which is held by so-called impatient investors, enthusiastic to remove their funds from the country as soon as possible.
If the controls were to be lifted in one, the krona would collapse to an unsustainably low level practically overnight.
Franek Rozvadowski, the IMF representative in Iceland, said the CBI’s plan can only work if carried out carefully and with a suitable foreign-reserves-buffer in place. He said in an interview with Reuters yesterday that such a buffer will be in place provided the IMF decides to pay out the overdue second tranche of its USD 2.1 billion loan to Iceland soon.
Meanwhile, Central Bank governor Svein Harald Oygard said that the small size of Iceland’s economy makes monitoring and regulating the outflow of capital relatively easy – a fact he hopes will enable the Bank to fully lift the restrictions without serious depreciation of the krona.
There is no official confirmation of how long the process will take and it is believed the plan is divided into stages which will happen only when the economy and currency are deemed ready. Iceland’s parliament has already approved the CBI plan.
Tags: 1 Billion, Bank Of Iceland, Cbi, Central Bank Governor, Central Bank Of Iceland, Collapse, Confirmation, Currency, Depreciation, Economy, Foreign Investments, Franek, Icelandic Krona, Imf, Investors, Outflow, Parliament, Reuters, Size Of Iceland, Tranche
Posted in Iceland | No Comments »
Saturday, July 18th, 2009
After several days of fierce discussion, Iceland's parliament has decided to apply to the European Union - a decision largely motivated by the nation's economic troubles and frail currency.
Tags: Currency, Economic Instability, Economic Troubles, European Union, Iceland, Parliament
Posted in Iceland | No Comments »
Monday, July 6th, 2009
Statistics paint the remarkable fiscal challenge Iceland’s people face. The central bank estimates that about 40,000 of the country’s 100,000 households took out loans to buy automobiles denominated in foreign currencies, chiefly the Japanese yen and Swiss franc. Similarly, about 80,000 Icelandic households have mortgages—all of them with payments either directly linked to inflation or, like those car loans, denominated in foreign currencies. When the krona was soaring, taking out forex loans for new Land Cruisers and condos overlooking the harbor might have seemed rational.
From about 2002, the soaring currency—buoyed by artificially high official interest rates—allowed hot money to flow over Iceland like the Gulf Stream that keeps the country temperate. Everyone from American hedge fund managers to Austrian dentists found it easy to borrow cheaply at home, or in low-rate currencies like the yen, and buy higher-yielding Icelandic securities.
From Reuters
Tags: Automobiles, Car Loans, Condos, Currency, Dentists, Estimates, Foreign Currencies, Gulf Stream, Hedge Fund Managers, Hot Money, Households, Inflation, Interest Rates, Japanese Yen, Krona, Land Cruisers, Mortgages, Reuters, Statistics, Swiss Franc
Posted in Iceland, Market | No Comments »
Sunday, June 28th, 2009
After a period during which Icelandic kronur were virtually unavailable outside of Iceland, travellers are once again able to buy the currency before arrival. But some airport bureaux de change are taking their usual business model a step further.
Airport exchange desks are not known for their great value for money, but the Icelandic krona is offering unusually fertile ground right now. IceNews sources in London report sales rates of one pound to 186 kronur while it will cost 245 kronur in order to purchase one pound on the way back into the UK. That’s a 25 percent difference.
Meanwhile, a pound will currently buy 210 kronur at Landsbanki in Iceland and tourists leaving the country can buy a pound for 212 kronur. The difference there is just half of one percent and both buying and selling are considerably better value in Iceland.
If you are planning to visit Iceland this summer – beware!
Tags: Airport Exchange, Bureaux De Change, Business Model, Currency, Desks, Fertile Ground, Iceland, Icelandic Krona, Isk, Kronur, Landsbanki, London Airports, London Report, Percent Difference, Pound On, Tourists, Travellers, Value For Money
Posted in Iceland | No Comments »
Monday, June 22nd, 2009
Iceland is the best value country for British travellers, according to a new report from the British Post Office. The company based its decision on the fact that the Icelandic currency; along with the Jamaican, Hungarian and Polish currencies; has lost ground against the pound while most others are becoming more expensive.
Visir.is reports the Post Office as saying:
“Adventure thirsty travellers can use the 24-hour daylight if they travel to Iceland this summer. The local currency is 40 percent better value this year than last. With the collapse of the krona, the Land of the Midnight Sun has taken top spot on the Post Office Travel Services’ cheap destinations list.”
A Post Office spokesman encouraged people to visit the four countries – but especially Iceland, which has always been so expensive before.
Tags: British Post Office, British Travellers, Collapse, Countries, Currencies, Currency, Destination Iceland, Holiday Destination, Iceland Holiday, Krona, Land Of The Midnight Sun, Office People, Office Spokesman, Office Travel, Travel Cheap, Travel Iceland, Travel Services, Travel To Iceland, Visir
Posted in Iceland | No Comments »
Thursday, April 23rd, 2009
Attractive prospect ... Iceland has become much cheaper for tourists. Photo: Holger Leue/Lonely Planet April 23, 2009 - 5:18PM With Iceland's economic meltdown sending its currency into freefall, tourists who saw this remote North Atlantic island as prohibitively expensive are now flocking to its dramatic volcanic scenery.
Tags: Attractive Prospect, Currency, Economic Meltdown, Freefall, Iceland, Lonely Planet, Photo, Tourists, Volcanic Scenery
Posted in Iceland | No Comments »
