What is the Icelandic Króna - ISK
Icelandic króna - ISK is the currency of Iceland. The króna is divided into 100 aurar and is often presented with the symbol kr. This currency has the nickname "Icelandic crown" in the financial markets because the English translation of króna is "crown.” In addition, the word is related to the Latin word corona, meaning crown.
As of mid-2018, one Icelandic króna equaled a little less than one U.S. cent. The Icelandic króna lost significant value versus the U.S. dollar in 2008, at the height of the Icelandic financial crisis, the year all three privately owned commercial banks in Iceland defaulted. International trading of króna temporarily halted that year. The króna generally stabilized versus the dollar from 2009 to early 2015, then rose moderately in value from mid-2015 to mid-2018.
BREAKING DOWN Icelandic Króna - ISK
Icelandic króna - ISK debuted in 1922 in coin form, followed by notes in 1929. The first króna traded until 1981, after which the government floated a second króna, which remains in use today. Due to inflation, the general public and The Central Bank of Iceland used whole krónur, the plural of króna, since 2002.
The Central Bank of Iceland pegged the króna to the Danish krone in the early 1920s, then to the British pound from 1925 to 1939. It then pegged the króna to the U.S. dollar until 1949, after which the króna floated freely.
Krónur are issued in notes of 1,000, 5,000 and even 10,000.
The króna is traded on global exchanges, although in fairly low volumes due to limited issuance. Traders flocked to króna leading up to the banking crisis, betting on its relative demise. In 2016 and 2017, however, traders bet on the relative strength of the króna versus the euro, pound and dollar, driven by the nation’s economic growth, strong tourism industry, relatively high rates of interest and the lifting of capital regulations in 2017 that initiated during the financial crisis.
Influences on Icelandic Króna - ISK
Iceland is a small country with a GDP of about $23 billion, although GDP per capita is among the highest in the world. The economy tends to vacillate, as does the króna, which has a history of several notable devaluations, the most recent in 2008, when the country accepted loans from the International Monetary Fund during the crisis.
Iceland’s economy depends more than most on tourism, which is the country’s main export and a major source of employment, as well as the global markets for fishing and aluminum. The country also exports electric power, due to its abundant geothermal resources.