The high interest rate has been the foundation of the bank's efforts to stabilise the
Icelandic crown, based on the guidelines of the International Monetary Fund (IMF).
The
Icelandic crown, which has been sheltered by capital controls since the country's three largest lenders failed in October 2008, has strengthened by over 2% against the euro since the MPC's previous meeting, held in June 2010, without any foreign exchange market intervention by the central bank.
A condition to carry out the repurchase is that Havila Shipping buys a sufficient volume of
Icelandic crowns to a price acceptable to the company by 31 October 2009.
The
Icelandic crown now trades at ISK83.436 a euro from over ISK84 on the open.
A government spokesman has said the claims against Iceland's collapsed banks held by the firm owned by Gunnlaugsson's wife -- totalled more than 500 million
Icelandic crowns ($4.1 million).
The current account BoP deficit widened to 68.9 billion
Icelandic crowns in 2000 from 43.6 billion ISK in 1999, and is running at over 7 percent of GDP.
A spokesman in the prime minister's office has said the claims of the firm owned by the prime minister's wife totalled more than 500 million
Icelandic crowns ($4.1 million).
It said the measures related to 1,200 billion
Icelandic crowns (roughly
