[Dow Jones] Threats by the Icelandic Central Bank Governor David Oddsson to push rates as far as 16% from 11.5% now may be designed to support ISK as well as reduce inflation.
But, warns ING, there is a potential the country will be pushed into recession as early as the second half of '06 and any support for the ISK won't last.
"Growing concerns about economic prospects mean we doubt this can last for long and continue to predict a long-term downtrend in the ISK," the bank says, forecasting that USD/ISK will rise to 80.00 by the second quarter from 73.07 now. (NEH)
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