Comments on: If this keeps up, soon we’ll be using it as a surfboard http://icelandweatherreport.com/2008/12/if-this-keeps-up-soon-well-be-using-it-as-a-surfboard.html Tue, 07 Feb 2012 15:07:04 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: fx http://icelandweatherreport.com/2008/12/if-this-keeps-up-soon-well-be-using-it-as-a-surfboard.html/comment-page-1#comment-4816 fx Sat, 06 Dec 2008 15:15:16 +0000 http://icelandweatherreport.com/?p=1160#comment-4816 Dec. 4 (Bloomberg) -- Iceland had its foreign and local currency ratings downgraded by Moody’s Investors Service after the government was forced to pile up debt in an effort to revive the economy. Moody’s downgraded the foreign and local currency ratings of Iceland to Baa1 with a negative outlook from A1, the agency said in a statement today. “The downgrade reflects Moody’s view that the Icelandic government’s financial strength has been significantly damaged by the banking and currency crisis,” Kenneth Orchard, a senior analyst at Moody’s in London, said in the statement. Iceland last month got approval for an International Monetary Fund-led loan worth as much as $5.3 billion. The country will be granted an additional $6.3 billion from the U.K., Germany and the Netherlands to cover deposit guarantees at failed Icelandic lender Landsbanki Islands hf. That means the island’s population of about 320,000 must shoulder debt worth more than $11 billion. The currency has lost about two thirds of its value this year. The krona gained 4.8 percent against the euro to trade at 178.26 as of 1:19 p.m. in Reykjavik. Offshore, the krona traded at about 330 per euro earlier this week, according to TD Securities in London. The central bank said it returned the currency to a partial free float today after it last week imposed capital restrictions preventing foreigners from exiting krona-denominated investments. Debt Most Icelanders have car loans in foreign currency, while soaring inflation, which may surge as high as 75 percent in coming months according to Danske Bank A/S, means households’ index- linked mortgage payments will jump. “The impact of the crisis on the economy, the restructuring of the banking sector and the task of stabilizing the currency will force the government to assume sizeable amounts of debt that will weigh on the public sector balance sheet for many years,” Orchard said. Loans taken on by Iceland’s government will bring national debt to 109 percent of gross domestic product by the end of next year, the government estimates. The country’s three biggest banks failed under the weight of their debt in October, precipitating the collapse of the currency and sending the economy into a recession. Gross domestic product may contract as much as 10 percent next year, the IMF estimates. Moody’s also cut its issuer rating and local currency bond ratings on the state-backed mortgage lender, the Housing Financing Fund, to Baa1 from A1, it said in a separate statement today. The outlook on the ratings is negative, it added. Dec. 4 (Bloomberg) — Iceland had its foreign and local currency ratings downgraded by Moody’s Investors Service after the government was forced to pile up debt in an effort to revive the economy.
Moody’s downgraded the foreign and local currency ratings of Iceland to Baa1 with a negative outlook from A1, the agency said in a statement today.
“The downgrade reflects Moody’s view that the Icelandic government’s financial strength has been significantly damaged by the banking and currency crisis,” Kenneth Orchard, a senior analyst at Moody’s in London, said in the statement.
Iceland last month got approval for an International Monetary Fund-led loan worth as much as $5.3 billion. The country will be granted an additional $6.3 billion from the U.K., Germany and the Netherlands to cover deposit guarantees at failed Icelandic lender Landsbanki Islands hf. That means the island’s population of about 320,000 must shoulder debt worth more than $11 billion.
The currency has lost about two thirds of its value this year. The krona gained 4.8 percent against the euro to trade at 178.26 as of 1:19 p.m. in Reykjavik. Offshore, the krona traded at about 330 per euro earlier this week, according to TD Securities in London.
The central bank said it returned the currency to a partial free float today after it last week imposed capital restrictions preventing foreigners from exiting krona-denominated investments.
Debt
Most Icelanders have car loans in foreign currency, while soaring inflation, which may surge as high as 75 percent in coming months according to Danske Bank A/S, means households’ index- linked mortgage payments will jump.
“The impact of the crisis on the economy, the restructuring of the banking sector and the task of stabilizing the currency will force the government to assume sizeable amounts of debt that will weigh on the public sector balance sheet for many years,” Orchard said.
Loans taken on by Iceland’s government will bring national debt to 109 percent of gross domestic product by the end of next year, the government estimates.
The country’s three biggest banks failed under the weight of their debt in October, precipitating the collapse of the currency and sending the economy into a recession. Gross domestic product may contract as much as 10 percent next year, the IMF estimates.
Moody’s also cut its issuer rating and local currency bond ratings on the state-backed mortgage lender, the Housing Financing Fund, to Baa1 from A1, it said in a separate statement today. The outlook on the ratings is negative, it added.

]]> By: FX http://icelandweatherreport.com/2008/12/if-this-keeps-up-soon-well-be-using-it-as-a-surfboard.html/comment-page-1#comment-4815 FX Sat, 06 Dec 2008 14:47:31 +0000 http://icelandweatherreport.com/?p=1160#comment-4815 This is a typical Haarde farce. That wasn’t international trading at all. The króna has been traded internationally for weeks, but at very low rates (both in exchange rates and volumes of trade). When the ECB started requoting reference rates on 6 November, the króna jumped by 48.8% in a single day (although only to a rate of 205 to the euro, whence it has since declined). Yesterday, the Icelandic FOREX market reopened “properly” for the first time in nearly two months. It has three market makers, all of them owned by the Icelandic government! The Icelandic government can choose any exchange rate it likes in the short term, so long as it has the powers to order the banks to sell at that rate! The European Central Bank refused to set a reference rate for the króna yesterday or today, given the smoke-and-mirrors farce in Reykjavík. All that is happening is that the Central Bank of Iceland, instead of selling its reserves at 187 krónur to the euro, is giving up the chance of increasing its reserves by letting its potential foreign currency income be sold 160 to the euro. Trading is very thin at those prices, as even the Icelandic banks admit, so I guess Iceland isn’t losing TOO much money for Geir Haarde’s ego trip, not this time and not yet. This is a typical Haarde farce. That wasn’t international trading at all. The króna has been traded internationally for weeks, but at very low rates (both in exchange rates and volumes of trade). When the ECB started requoting reference rates on 6 November, the króna jumped by 48.8% in a single day (although only to a rate of 205 to the euro, whence it has since declined).

Yesterday, the Icelandic FOREX market reopened “properly” for the first time in nearly two months. It has three market makers, all of them owned by the Icelandic government! The Icelandic government can choose any exchange rate it likes in the short term, so long as it has the powers to order the banks to sell at that rate! The European Central Bank refused to set a reference rate for the króna yesterday or today, given the smoke-and-mirrors farce in Reykjavík.

All that is happening is that the Central Bank of Iceland, instead of selling its reserves at 187 krónur to the euro, is giving up the chance of increasing its reserves by letting its potential foreign currency income be sold 160 to the euro. Trading is very thin at those prices, as even the Icelandic banks admit, so I guess Iceland isn’t losing TOO much money for Geir Haarde’s ego trip, not this time and not yet.

]]> By: alda http://icelandweatherreport.com/2008/12/if-this-keeps-up-soon-well-be-using-it-as-a-surfboard.html/comment-page-1#comment-4812 alda Sat, 06 Dec 2008 11:14:55 +0000 http://icelandweatherreport.com/?p=1160#comment-4812 maja - indeed. And it is especially good news to those Icelanders who have loans or mortgages in a foreign currency and who now see their payments decrease by one-fifth from what they were a few days ago. maja – indeed. And it is especially good news to those Icelanders who have loans or mortgages in a foreign currency and who now see their payments decrease by one-fifth from what they were a few days ago.

]]> By: Marc Scot http://icelandweatherreport.com/2008/12/if-this-keeps-up-soon-well-be-using-it-as-a-surfboard.html/comment-page-1#comment-4807 Marc Scot Sat, 06 Dec 2008 07:30:22 +0000 http://icelandweatherreport.com/?p=1160#comment-4807 James: You first might want to check whether Heathrow will be handling ISK to begin with. I could not change my leftover krona at Glasgow Airport a month ago as the kiosks were no longer accepting them. Hope that's no longer the case, and very pleased to read about the krona jump! A little will go a long way! James: You first might want to check whether Heathrow will be handling ISK to begin with. I could not change my leftover krona at Glasgow Airport a month ago as the kiosks were no longer accepting them. Hope that’s no longer the case, and very pleased to read about the krona jump! A little will go a long way!

]]> By: maja http://icelandweatherreport.com/2008/12/if-this-keeps-up-soon-well-be-using-it-as-a-surfboard.html/comment-page-1#comment-4802 maja Sat, 06 Dec 2008 02:16:57 +0000 http://icelandweatherreport.com/?p=1160#comment-4802 Good news is good news. Good news is good news.

]]> By: James http://icelandweatherreport.com/2008/12/if-this-keeps-up-soon-well-be-using-it-as-a-surfboard.html/comment-page-1#comment-4800 James Sat, 06 Dec 2008 00:05:33 +0000 http://icelandweatherreport.com/?p=1160#comment-4800 Talking of currency, I will be flying to Iceland very soon and... does anyone know if would I get a better GBP-to-ISK exchange rate for cash at the London airport than in Iceland? There was very little difference in the past, but I'm now wondering whether GBP-to-ISK cash conversion in Iceland is at an international rate or the internal artificial market rate? Thanks. Talking of currency, I will be flying to Iceland very soon and… does anyone know if would I get a better GBP-to-ISK exchange rate for cash at the London airport than in Iceland? There was very little difference in the past, but I’m now wondering whether GBP-to-ISK cash conversion in Iceland is at an international rate or the internal artificial market rate? Thanks.

]]> By: alda http://icelandweatherreport.com/2008/12/if-this-keeps-up-soon-well-be-using-it-as-a-surfboard.html/comment-page-1#comment-4799 alda Fri, 05 Dec 2008 23:33:16 +0000 http://icelandweatherreport.com/?p=1160#comment-4799 Doug - you rock, you know that? One of you is worth about a zillion of the Kristjans of this world. How's that for valuation? Doug – you rock, you know that? One of you is worth about a zillion of the Kristjans of this world. How’s that for valuation?

]]> By: digdug727 http://icelandweatherreport.com/2008/12/if-this-keeps-up-soon-well-be-using-it-as-a-surfboard.html/comment-page-1#comment-4798 digdug727 Fri, 05 Dec 2008 23:07:21 +0000 http://icelandweatherreport.com/?p=1160#comment-4798 @ peter & kristjan: yes, the market is artificial. yes, it's feel-good propaganda. i am glad you have realised that the value of ALL currencies in the trading market are defined by the subjective view of their worth. if believing that the kronur's value has increased, actually increases the value even a LITTLE BIT, it is a good thing. now, if you just want to be a bitter sourpuss, how about snarling at the euro? it's value is way too high in comparison to the GBP, the ISK, and the USD. fair is fair, y'know? ;) peace doug austin, texas @ peter & kristjan: yes, the market is artificial. yes, it’s feel-good propaganda. i am glad you have realised that the value of ALL currencies in the trading market are defined by the subjective view of their worth. if believing that the kronur’s value has increased, actually increases the value even a LITTLE BIT, it is a good thing. now, if you just want to be a bitter sourpuss, how about snarling at the euro? it’s value is way too high in comparison to the GBP, the ISK, and the USD. fair is fair, y’know? ;)
peace
doug
austin, texas

]]> By: kristjan http://icelandweatherreport.com/2008/12/if-this-keeps-up-soon-well-be-using-it-as-a-surfboard.html/comment-page-1#comment-4794 kristjan Fri, 05 Dec 2008 21:40:53 +0000 http://icelandweatherreport.com/?p=1160#comment-4794 Peter is correct- the krona market is a completely artificial instrument set up and controlled by the Icelandic government. In real world the current rate is 295 to the euro. There is no true float - just more feel good propaganda (apparently successful) from the Icelandic government and bankers. Peter is correct- the krona market is a completely artificial instrument set up and controlled by the Icelandic government. In real world the current rate is 295 to the euro.

There is no true float – just more feel good propaganda (apparently successful) from the Icelandic government and bankers.

]]> By: Marc Scot http://icelandweatherreport.com/2008/12/if-this-keeps-up-soon-well-be-using-it-as-a-surfboard.html/comment-page-1#comment-4793 Marc Scot Fri, 05 Dec 2008 19:49:44 +0000 http://icelandweatherreport.com/?p=1160#comment-4793 I picked up and read Indriðason’s latest translated work <em>Arctic Chill</em> when last in Reykjavik (and the weather that week was freezing so it set the mood well!). Definitely one of his better books. And a few colleagues in Iceland strongly recommended <em>Independent People</em> so that's likely next... I picked up and read Indriðason’s latest translated work Arctic Chill when last in Reykjavik (and the weather that week was freezing so it set the mood well!). Definitely one of his better books. And a few colleagues in Iceland strongly recommended Independent People so that’s likely next…

]]>