Iceland crown trades internationally after rate rise

LONDON, Oct 28 (Reuters) - The Icelandic crown traded at 240 per euro on the Reuters matching dealing system in the first trade since October 22 on Tuesday, after the country's central bank hiked borrowing costs six percentage points to 18 percent.

The quoted level compares with Monday's central bank fixing at 152 per euro ICEX. Icelandic banks were quoting the currency at levels between 152.23 and 151.23 on the Reuters conversational dealing system.

"I think there is a bit of relief that people now know what the policy framework is going to be. We still don't know exactly how they will switch from the local auctions to a free floating currency again," said Beat Siegenthaler, strategist at TD Securities in London.

Iceland's government took control of its banking system earlier in October and has since imposed harsh foreign exchange controls, holding an auction every day to set the value of the crown.

International trade in the crown had ground to a halt for roughly a week until the trade quoted on Tuesday and is still extremely light and illiquid.

(Reporting by Peter Apps and Veronica Brown)