Icelandic news translated into English

November 3, 2008

Were betting on the Króna weakening

Filed under: economy — newsfrettir @ 7:12 pm

Amongst other information gathered after inspection of the balance sheets of the banks that were recently bankrupt, Glitnir, Kaupþing and Lansbankinn, are “large scale postures against the Icelandic króna” as the Morgunblað source says. He does not want to be named but said it was surprising how big of amounts from investment companies, native and forreign, that were ready to bet that the Icelandic króna would weaken.

Most of the deals are between two parties on the market that banks have interposition with. What is discussed are bonds that are conjunction of result, in most cases, where the yield will grow as the króna weakens.

The total amount of one of those deals that the banks were in interposition with is at least 5 or 6 billion dollars, that is 600 to 720 billion Icelandic króna as it is worth today, according to the Morgunblað source.

A trade like this, where interests are connected to currency, are common and fully legal. According to the Morgunblað source there are no evidence that prove that the investment companies that were betting on the weakening of the króna should have affected the currency market. It is illegal to protect the market from unnatural effects on the market.

(News Article by *Golli*)
Original Article in Icelandic

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