Another Icelandic Crisis: And Yet, the Krona Doesn’t Seem to Care

So let’s look at why the krona actually gained strength. You see, when the Prime Minister (Geir Haarde) resigned that day, the market got some hope that change could now come.

While currencies usually hate any major changes, it’s a bit different when those changes promise to fix a broken economy. In other words, Forex traders believe a new political situation in Iceland could actually help the economy. And the krona benefited from this belief.

From World Currency Watch


2 Responses to “Another Icelandic Crisis: And Yet, the Krona Doesn’t Seem to Care”

  1. 1 Roy January 28, 2009 at 3:45 pm

    Great, now I can buy some dollars while in New York and only have to shell out 225 Isk for each dollar. What a bargain!

  2. 2 Vilhjalm A. January 28, 2009 at 6:06 pm

    Maybe the little guy who works in the basement of the Central Bank buying ISK got orders from the “new political order” in Iceland to strengthen the currency in order to show the IMF that the “stable government” requirement is being satisfied, so that IMF money will keep flowing. Or maybe he wants to keep his job under the new administration.
    Or maybe the aim is to give ISK some “momentum” so that currency traders will start playing ISK again.
    It’s hard not to be suspicious of anything that the Icelandic government does.
    Iceland is still broke and the currency printing press will start up again very soon.

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