Emma Lawson, analyst at the financial service company Merrill Lynch & Co., believes investors may start selling Icelandic krónas and that its currency rate will drop as a consequence. She fears that trouble lies ahead for the Icelandic economy.
“I would be very careful about holding on to Icelandic krónas,” Lynch told Bloomberg, adding that one of the basic problems of the Icelandic economy at the moment is that the króna is too high compared to the trade deficit, Fréttabladid reports.
Prime Minister Geir H. Haarde disagrees. “The outlook is not bad,” he said, explaining that experts at the Ministry of Finance are predicting that the trade deficit will decrease rapidly in the near future.
Gylfi Arnbjörnsson, managing director of ASÍ (Icelandic Confederation of Labor), said foreign financial consultants have warned for a long time that the disadvantageous economic administration practiced by Icelandic authorities can lead to international markets losing their faith in the Icelandic króna. “I don’t know if that is about to happen now.”
Managing director of SA (Confederation of Icelandic Employers) Vilhjálmur Egilsson said the Icelandic króna has been overestimated. “The currency has been decided more according to the position of the financial market than the position of export and competition.”