Icelandic krona -- why such high interest rate?

[Deleted member 4644]

I know that high interest rates are usually linked to "risk".

I see that the Icelandic krona has a rate of about 9%. Does anyone know if there are any particular risks associated with the krona?

If not, I am going to drop $10k on it next week.

 

[timswim78]

What do you mean when you say, "I see that the Icelandic krona has a rate of about 9%?"

I'm not sure how a currency is tied to one interest rate. Are you talking about inflation, CD's, government interest rates, or what?

 

[maddogchen]

its the risk with your exchange rate. the exhange rate between dollar and krona has varied by around 25%. you also lose out with fees in exchanging for krona

 

[Deleted member 4644]

I am talking about the CD rate at Everbank. How long back do you have to go to see tat 25% swing? Months? Years? When I looked, it seemed that the Krona has been *fairly* stable in the last few months.

 

[DaveSimmons]

9% APY is worse than the historical growth of the S&P 500, so you could buy stock index mutual fund or ETF shares instead. My foreign index funds grew 2-3 times that much annually over the last few years, and the S&P is at a several year low right now.

 

[sdifox]

Back when Argentina is in hyperinflation, the banks would offer 30% interest rate. It was risky as hell since the national bank can at any day declare all US deposits frozen and you can only withdraw a certain amount per day and in local currency.

 

[Deleted member 4644]

Well, Iceland aint Argentina. But I understand there is a fair amount of risk associated with it.

 

[maddogchen]

Originally posted by: Deleted member 4644
I am talking about the CD rate at Everbank. How long back do you have to go to see tat 25% swing? Months? Years? When I looked, it seemed that the Krona has been *fairly* stable in the last few months.

i looked back 2 years.
Average (737 days): 67.34491
High: 80.43000
Low: 57.96000