Tuesday, October 28, 2008

Iceland's interest rate increase from 12% to 18%

Iceland's central bank raised interest rates by 6% to 18% today as a part of a loan agreement imposed by the IMF to battles against financial collapse.

The central bank governor said the increase was part of its agreement with the International Monetary Fund, from which it borrowed $2bn (£1.3bn).

The move was designed to restore trust in Iceland's battered currency. After the announcement, the Icelandic krona traded internationally for the first time in a week.

The rate rise means that investors get a much higher return for putting money back into the Iceland's crippled financial system.

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