Icelandic National Broadcasting Service, RÚV, reports that Danske Bank has published another report critical of the Icelandic economy.
According to RÚV, Danske Bank says it published this new report because the exchange rate of the Icelandic króna declined faster and further than it had previously assumed.
On March 21st of this year, Danske Bank published a report titled “Iceland – Geyser crisis” which provoked a strong reaction within Iceland. Among others, the research department at the Icelandic bank Glitnir (formerly known as Íslandsbanki) said that “the Danske Bank report looks written with the intent of putting the Icelandic economy in the most unfavourable light possible.” KB-Bank (Kaupthing) issued a special rebuttal which said that the Danske Bank “report has numerous factual errors and is fraught with inaccurate and wrong use of Icelandic economic data.”
According to RÚV, Danske Bank doubts that raising interest rates to 16%, as Davíd Oddsson of the Icelandic Central Bank has suggested, will be sufficient to bring lending, wage raises and the decline of the Icelandic króna under control. Danske Bank predicts that will continue to slide and will fall to ISK 110 versus the Euro within 12 months. At market close Wednesday, one Euro was worth approximately ISK 97.
