The ISK dropped by 2.52 percent yesterday—once again reaching an historical low—with the exchange rate index closing at 176 points, down from a peak of 179 points earlier in the day.
According to Morgunbladid, everyone seems to agree that the ISK is far too low and that it will appreciate at some point in the future.
However, investors are hesitant to purchase the Icelandic currency while no one can predict how it will develop in the following weeks and months.
“The króna will probably not appreciate again until foreign financial markets recover. While the credit crunch continues to deepen in the United States, the króna is unlikely to appreciate,” said Thorvardur Tjörvi Ólafsson, an economist at the Central Bank of Iceland.
However, Ásgeir Jónsson, director of Kaupthing Bank’s research department, believes that the ISK is likely to start appreciating again in the near future. “The currency market will, however, not calm down until we start to see these glacier bonds [bonds denominated in ISK] maturing and uncertainty decreasing on international markets.”
USD 1 is currently ISK 94.52, EUR 1 is currently ISK 133.92, GBP 1 is currently ISK 169.66 and DKK 1 is currently ISK 17.95.
Click here to read more about the development of the ISK.