After some dicey times at the beginning of September, the Icelandic króna has strengthened again in the last two days, particularly today.
September has presented something of a rocky road for the Icelandic króna (ISK). After doubts intensified about WOW Air’s financial health earlier this week, the currency saw a 2% dip on Sept. 11, bringing it to a total of 6% depreciation since the beginning of the month.
At the time, there was great general pessimism about WOW Air’s proposed issue of three-year convertible bonds, seen by some as a last-ditch attempt to keep the airline afloat. WOW Air is the carrier for approximately 28% of all travellers to Iceland, so worries about its solvency translated to worries about the economic future of Iceland. Since the country’s economy is largely tourism-based, this had a negative effect on the currency.
Today and yesterday, however, positive news has filtered out about the convertible bond issue. By last night, WOW Air’s directors had managed to secure roughly €45 million from investors, bringing them within a stone’s throw of their stated goal of €50 million.
In addition, according to sources close to him, Skúli Mogensen, WOW Air CEO, has reportedly secured funding from a private investor to the tune of dozens of millions of euros. It is unclear at this point how large a percentage of the company would come into the possession of this investor, should the deal go through.
As optimism increased, the króna immediately saw a jump in value. Since last night it has strengthened by 1.38% against the euro, 1.52% against the US dollar and 1.44% against the pound Sterling. While it is difficult to say at this time whether the upward trend will continue, the general air of optimism remains.
WOW Air is expected to release a formal statement on the status of the convertible bonds at the end of the week.