Why Norway’s krone keeps getting weaker

The exchange rate of the Norwegian krone is becoming weaker, in a trend experts predict will continue.

Why Norway’s krone keeps getting weaker
The krone is at its worst rate against the euro since the latter was launched 20 years ago. Photo: wrangel/Depositphotos<

The price of one euro in Norwegian kroner is more than at any time since the single European currency was created 20 years ago, a clear sign of the current weakness of the NOK.

On Thursday morning, Nordea Markets had the price of a euro at 10.1868 kroner, NRK reports.

That beats the previous worst exchange rate for the krone against the euro, which was 10.1695 on Christmas Eve 2008, according to the report.

“The Norwegian krone is now historically low against the euro,” Nordea Markets exchange strategist Joachim Bernhardsen told NRK.

Norway’s currency is also at its lowest level in 20 years with respect to the US dollar.

The poor exchange rate is bad news for people using their Norwegian bank accounts while travelling abroad, but good news for businesses.

Currency experts said that uncertainty relating to Brexit, international trade conflicts and global unrest are all part of the equation which has resulted in the poor position of the krone.

“We keep getting mixed signals from negotiations between China and the US, and between the EU and the UK. So two of these major points of uncertainty, Brexit and the trade war, are unresolved,” Bernhardsen said to NRK.

“We think that points towards an even weaker krone by the New Year,” he added.

The weaker krone makes foreign trips on Norwegian currency more expensive, but can boost businesses, Magne Østnor, currency strategist with DNB Markets, told NRK.

“This helps stimulate business here in Norway and thereby contributes to continued jobs growth,” he said.

As the krone sinks in value, the NOK worth of Norway’s sovereign wealth fund actually goes up, because it is listed in foreign currency.

The value of the fund in Norwegian kroner was 9,950 billion kroner on Wednesday, taking it closer to the 10,000 billion krone-mark than ever before.

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Coronavirus and oil send Norway’s krone plummeting to new low

An unusually sharp dip in oil prices over the weekend has left Norway’s already-weakened currency at its lowest-ever value compared to the euro.

Coronavirus and oil send Norway’s krone plummeting to new low
Photo: kjelljoran /Creative Commons

The depreciation of the krone increased late on Sunday night after a fall in oil prices, finance media E24 reports.

Against the euro, the krone had depreciated around 51 øre or 5 per cent as of Monday morning, E24 writes, putting 1 euro at a value of 10.95 kroner, most expensive price Norwegians have ever paid for the European single currency.

Additionally, the krone depreciated by around 31 cents or 3.39 per cent against the dollar. One dollar now costs 9.55, the worst rate for buying dollars with kroner since October 2000.

The further weakening of Norway’s currency comes when market uncertainty is also high due to the outbreak of coronavirus.

A breakdown in negotiations between Opec and Russia on Friday further exacerbated the problems facing the krone, according to E24’s report.

Just before 9am on Monday, oil prices plunged 26.68 percent to $33.39 a barrel, the biggest fall in oil prices since the Gulf War.

“It has gone from bad to worse. Oil prices have not hit bottom yet. If the supply continues to increase and there is a price war, that is going to hit the krone full on. This is happening on top of everything else,” Magne Østnor, a currency strategist with bank DNB, told E24.

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