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MUMBAI, Nov 27 (Reuters) - Iceland's finance minister said on Tuesday he was worried about speculation on the Icelandic crown.

The crown is up nearly 13 percent against the dollar <ISK=> this year, driven by a surge of investment into the country and high interest rates, although it has remained fairly stable against the euro <EURISK=>.

"(Speculation) is something that we worry about but it is something we can do little about. In an open economy like ours, we have to take it along," Finance Minister Arni Mathiesen told reporters on a trip to the Indian financial hub Mumbai.

Iceland's economy has grown rapidly in recent years on the back of foreign investments in aluminium and energy, pushing up house prices and wages and bringing near full employment to the rugged island.

The central bank raised interest rates to a record 13.75 percent at the start of the month, a move which sent the currency up sharply at the time, although it has since lost some ground.

It was trading at 62.83/88 per dollar and 93.44/54 per euro at 1500 GMT.

Mathiesen said Iceland's economy was projected to grow 1.2 percent in 2007 but added: "It is probable that it will go beyond that. We have projected 2.5 percent growth in the coming year."

The economy grew 4.2 percent in 2006, down from 7.1 percent in 2005, but was flat year-on-year in the first quarter of 2007.

Two government documents available on the Ministry of Finance Web site list the official forecast for GDP growth in 2008 at 1.2 percent.

Rating agency Standard & Poor's cut its outlook on Iceland to negative from stable on Nov. 20, saying the country faced continued economic imbalances made worse by fiscal policy that was too loose. It gives Iceland a foreign currency rating of A plus.

"I think their outlook has much less to do with what's happening in Iceland but what's happening in the world economy due to subprime," Mathiesen said. (Reporting by Anurag Joshi) (([email protected]; +91 22 6636 9000))

Keywords: ICELAND ECONOMY/FINMIN