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Iceland crown falls vs euro after PM fails to reassure

Posted by seumasach on October 8, 2008

Reporting by Carolyn Cohn and Natsuko Waki

Forbes

LONDON, Oct 7 (Reuters) – The Icelandic crown fell against the euro on Tuesday after comments from Icelandic Prime Minister Geir Haarde failed to reassure investors.

Haarde said at a press conference that Iceland’s crown peg, announced earlier on Tuesday, would come into force on a temporary basis.

‘Nobody is believing in this peg,’ said Lars Christensen, head of emerging markets at Danske in Copenhagen.

‘The crisis management in Iceland has been very bad so nobody is willing to give the country the benefit of the doubt.’

The central bank said earlier on Tuesday it would fix the crown against a basket of currencies at a level of 131 per euro.

But traders said the central bank had not been active in the market.

The crown fell to 202 per euro on the Reuters matching dealing system from 140 before the press conference.

It dropped to 150 per euro in local bank trading from levels between 135 and 140 earlier.

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