The krone has been severely weakened in recent days, with foreign banks now removing the Norwegian krone.
On Thursday evening in Norway, you have to pay 10.01 kroner for 1 euro in the professional forex market (see chart below). This is the weakest crone exchange rate in a month against the currency of our most important trading partners.
Erica Dalstø Nettavisen Økonomi, SEB’s chief strategist, told CE that there had been major krone moves in the exchange rate from 10.56 per 1 euro on August 19 to 9.67 kr on October 20. A key word is the price of oil.
– Crone’s first reinforcement driven by sharp rise in oil prices. At the same time, the market began to push up Norges Bank’s interest rates.
– With the rise in oil prices, the mood in the krone market changed. Tolstoy says that despite rising interest rates, Croner sellers are still the number one seller. Higher Norwegian interest rates make it more attractive for investors to invest in the Norwegian fixed income market.
Read more: Crohn causes a complete reversal: – Dangerous
Expensive Holidays Abroad
But, if many people want to sell money, it weakens the exchange rate. In isolation, the weak krone is good for the Norwegian export industry and import-rival companies because Norwegian goods are relatively cheap compared to foreign goods.
The other side of the coin is higher import prices and higher foreign travel. If you go to a euro country, this trip has increased by 3.5 percent in four weeks.
Tolstoy says the sale of the krone may be due to foreign banks making a profit.
Also read: Norges Bank: Interest rates rise in December
At the same time, Crohn enters the season with a weak period, where Crohn has historically been severely weakened towards the start of the year. This is a tendency to strengthen oneself.
– In other words, the chief strategist says it’s more than an “oil story”.
But we also have important Norwegian players who affect the krone conversion rate. From Friday, November 19, Norges Bank will cut daily currency sales on behalf of the government. So far in November, the central bank has been selling the currency every day, buying NOK equivalent to NOK 700 million. Now there are no Crone purchases for the rest of the month.
This change is due to the low demand for the transfer of funds from the Petroleum Fund – Government Pension Fund Global – to the Central Government. Higher oil prices indicate higher export earnings in the treasury, resulting in higher foreign exchange earnings.
Also Read: Crone Straight – Chief Economist Stops Rising Interest Rates
Low tail wind
Norgas Bank has long been selling the currency and buying the coroner as politicians spent billions from the petroleum fund during the corona crisis. Now operations have been reduced so that Crone purchases will disappear.
When asked what the Crone exchange rate means, Olsen briefly responds in the leading economist gadget at Nordia Markets:
– It gives low tail air to the crown.
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