Iceland's Krona Quoted Almost 50 Percent Below Peg

By Bo Nielsen

(Corrects headline, first paragraph to reflect accurate percentage change.)

Oct. 8 (Bloomberg) -- Iceland's krona was priced at almost 50 percent below the peg against the euro set by the central bank yesterday to stabilize the currency as regulators said they took control of Glitnir Bank hf, the country's No. 3 lender.

Nordea Bank AB, the biggest Scandinavian lender, said the price suggested by bid/ask spreads in pre-market trading was 255 per euro, compared with the 131 per euro level established by the central bank yesterday. There had been no buying of the krona to support the peg by the central bank, Nordea said.


``It's looking very gloomy for Iceland at the moment,'' said Bjarke Roed-Frederiksen, an economist in Copenhagen at Nordea. ``The currency isn't trading at the price the central bank has set and we're already seeing signs that people don't want to accept krona in transactions on Iceland.''

Sweden's central bank said it will loan as much as 5 billion kronor ($700 million) to the Swedish unit of Iceland's Kaupthing Bank hf after it was unable to meet payment obligations and was put up for sale.

To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net