The exchange rate of the Icelandic króna (ISK) depreciated by almost 2.5 percent yesterday with the exchange rate index dropping to 196.7 points. It has not been lower since the beginning of February 2009.
Since late February the exchange rate of the ISK has appreciated gradually, going up until Thursday last week, Fréttabladid reports.
The Icelandic króna. Copyright: Icelandic Photo Agency.
Before the ISK began weakening again, it hadn’t been stronger since the end of September last year, before the state acquired a 75 percent stake in Glitnir Bank, which marked the beginning of the economic crisis.
USD 1 currently trades for ISK 116, EUR 1 for ISK 151, GBP 1 amounts to ISK 163 and DKK 1 to ISK 20.
According to Jón Bjarki Bentsson, an expert at Íslandsbanki (formerly Glitnir), the current depreciation of the ISK is primarily caused by interest payments on government bonds of ISK 5 billion (USD 43 million, EUR 33 million), which falls due today and mostly goes to foreign investors.
The government bonds are worth ISK 70 billion (USD 604 million, EUR 464 million), Bentsson stated.
Click here to read more about the development of the ISK exchange rate.