The currency rate of the ISK dropped by 3.5 percent yesterday, reaching a new historic low. According to Ingólfur Bender, director of Glitnir Bank’s research department, the situation is caused by a lack of confidence in the Icelandic economy.
The euro is currently at ISK 130, 1 US dollar is at ISK 84, the pound sterling is at ISK 165 and the Danish crown is at ISK 17.
Bender explained in an interview with ruv.is that risk aversion has weakened the ISK further and caused the credit default swaps (CDS) of the banks to spread.
Bender calls for action from the government to improve the situation, like by strengthening the state’s currency reserves. Bender said such measures are important to improve the situation, but would not be a permanent solution to Iceland’s economic problem.
The selected share index of the OMX-NASDAQ Nordic Stock Exchange in Iceland dropped by almost one percent yesterday.
Despite the plummeting rate of the ISK, Minister of Finance Árni M. Mathiesen remains optimistic, saying that the state of the ISK is not just negative for the Icelandic economy. “The fishing industry, tourist industry and heavy industry could grow stronger under these circumstances,” the minister told Fréttabladid.
Click here to read more about the weakening of the ISK.