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Time To Buy A House... In Iceland

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http://www.bloomberg.com/apps/news?pid=206...mp;refer=europe

Aug. 16 (Bloomberg) -- Iceland's central bank probably will raise the benchmark interest rate to a record 13.5 percent today after inflation soared to more than triple its target, a survey of economists shows.

Sedlabanki, based in Reykjavik, will increase the repurchase rate half a point, according to six of nine economists surveyed by Bloomberg News. The other three forecast a three-quarter-point increase. The decision will be announced at 9 a.m. local time.

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Anyone fancy a flutter?!?

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http://www.bloomberg.com/apps/news?pid=206...mp;refer=europe

Aug. 16 (Bloomberg) -- Iceland's central bank probably will raise the benchmark interest rate to a record 13.5 percent today after inflation soared to more than triple its target, a survey of economists shows.

Sedlabanki, based in Reykjavik, will increase the repurchase rate half a point, according to six of nine economists surveyed by Bloomberg News. The other three forecast a three-quarter-point increase. The decision will be announced at 9 a.m. local time.

*****************

Anyone fancy a flutter?!?

Wow, how do I open a Bank Account is what I want to know. Inflation beating returns for sure :)

AFP

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I don't understand why rates are so high, it seems that a big reason for the lack of capital is huge investment in brand new aluminium smelters, this is a problem because ...? In the longer term there is the possibility of exporting vast amounts of geothermal electricity to Europe. They do have a lot of foreign debt (three times the size of the economy), but most of this invested in foreign assets. It seems that a number of US investors paniced for no good reason and demanded their money back all at once.

http://www.icelandreview.com/icelandreview...w_0_a_id=223246

http://www.strandir.is/skjol/financial-tim...0is%20broken%22

Edited by Della

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Wow, how do I open a Bank Account is what I want to know. Inflation beating returns for sure :)

Ahem.

Yes, but the currency is tanking due to Iceland's economy overgearing itself in every way, leading to rampant inflation.

In other words, you will earn 13.5% in your Krona, but the Krona will be worth 13.5% less in the exchange rate with other foreign currencies, so the net result is zero.

In addition, if you live in Iceland and don't need to convert to other currencies, the net result is still zero as prices there will have risen by a similar amount.

Edited by jiggerpokery

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Ahem.

Yes, but the currency is tanking due to Iceland's economy overgearing itself in every way, leading to rampant inflation.

In other words, you will earn 13.5% in your Krona, but the Krona will be worth 13.5% less in the exchange rate with other foreign currencies, so the net result is zero.

In addition, if you live in Iceland and don't need to convert to other currencies, the net result is still zero as prices there will have risen by a similar amount.

A new Krona carry trade?

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Ahem.

Yes, but the currency is tanking due to Iceland's economy overgearing itself in every way, leading to rampant inflation.

In other words, you will earn 13.5% in your Krona, but the Krona will be worth 13.5% less in the exchange rate with other foreign currencies, so the net result is zero.

In addition, if you live in Iceland and don't need to convert to other currencies, the net result is still zero as prices there will have risen by a similar amount.

Although it did lose 20% of its value recently for no good reason the Icelandic Krone has actually recovered to the long term trend since then.

So I suppose if the trend continued you would actually see 13.5% gain in pound terms

http://www.bi.is/default.asp?skjal=00,08,0...p;menu=00,09,08

Edited by Della

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Iceland was the first victim of the reversal of the carry trade (I think).

Yep. this is how i understand it. Lots of carry trade funded borrowing..evaporated overnight and the Krona collapsed forcing the government to hike the rates ERM style.

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Yep. this is how i understand it. Lots of carry trade funded borrowing..evaporated overnight and the Krona collapsed forcing the government to hike the rates ERM style.

It seems that the Americans think Iceland is emerging market and treat it accordingly, whereas we all know it is as much an emerging market as for example Norwich.

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It seems that the Americans think Iceland is emerging market and treat it accordingly, whereas we all know it is as much an emerging market as for example Norwich.

I must have missed the volcanos and geysers the last time I was in Norwich :)

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  • 339 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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