Wednesday, October 15, 2008

The Devaluing of the Icelandic Kroner

Well the financial mess that is currently going on has definitely gone global and it has essentially bankrupted the country of Iceland.

Back when Julie and I were visiting Iceland in the summer of 2007, it was one of our most expensive trips to date! Indeed, the Icelandic Kroner was valued at nearly 60 kroner to 1 US dollar. That ultimately translated to $25 pizzas, $25 hamburgers, $200/night for a double in three or two-star accommodations (It was over $360/night for what seemed like a dorm room in Reykjavik!), $40-$60 main course dishes (i.e. fish or lamb, respectively), $120 pocket Icelandic-to-English dictionary, etc. etc. We thought the $3 hot dogs were reasonably priced, and in fact, we pretty much dined on a mostly artery-clogging diet of hot dogs, burgers, and pizzas just so we don't go broke during the trip.

We wondered how the locals live under such pricey conditions, and after several inquiries, we learned that most of them worked two or three jobs. Plus, most of the citizens were living on credit. So you can imagine how devastated both the banks and the locals were once the credit bubble burst. I feel real bad for the Icelandic people, but I know they're pretty hardy survivors and they'll get through this.

The last we checked, the Icelandic Kroner is now trading at over 100 Ikr to 1 USD. I guess this will mean pretty affordable prices for travelers to the country these days.

If you're curious to see what visiting Iceland is like... [read more]

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