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Is Iceland The New Bear Stearns

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by Felix Salmon
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Apr 01 2008 12:00am EDT

Is Iceland the New Bear Stearns?

Got some spare cash? Thought about parking it in Iceland? The currency has plunged against the dollar, which means you get more than 77 Icelandic krona to the dollar, up from 65 at the beginning of March. Meanwhile, overnight rates are now at 15%. Between the massive positive carry and the probable bounce-back of the currency, this could be a juicy trade indeed. Just be prepared to lose money if things go wrong: Iceland recovered the last couple of times the carry trade was unwound this brutally, but that was in the context of much friendlier markets globally. This time might be different.

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