Can this happen to your country currency? In case of Icelandic krona it all started in October 2008, when the effects of the GFC brought a huge disruption to the Icelandic banking sector. The value of the krona plummeted, and on 7 October 2008 the Icelandic Central Bank attempted to peg the krona at 130 against the euro. This plan did not work. The krona later fell to 340 against the euro
before trade in the currency was suspended. After a period of tentative, very low-volume international trading in the krona, activity had been expected to pick up again throughout November 2008, albeit still with low liquidity, as Iceland secured an IMF loan. However as of January 2009 the krona was still not being traded regularly, with the exchange rate being set only intermittently, as of December 3, 2008 at 290 ISK per euro. The previously high costs for foreign tourists have been drastically reduced, which Iceland's tourism industry hopes to exploit.
Labels: banking, currency, Iceland, IMF