Historic drop for the Norwegian Krone

KroneThe value of Norwegian Krone has not fallen this much against the Euro since the common European currency was introduced in 1999.  "We see a massive plunge of the Norwegian Krone. This day makes history as the one with a record-high drop in the value of the Krone," says Ole Håkon Eek-Nielsen, chief analyst in Norway's second-largest financial group, Nordea.

 

"From the lowest point to the highest, the price of the Euro has increased by 0,64 Kroner. This has never happened before, not even during the financial crisis in 2008," Eek Nielsen tells NRK.

According to the analyst, the weaker Krone is most likely an impulse from a drop in oil prices, but the Krone has declined more in relation to the fall in oil prices that what it has done before. At this point, a Euro costs NOK 9,50. 

Currency strategist Magne Østnor in DnB tells NRK that the turbulence against the Norwegian Krone is far from over. He refers to 2008, when the Euro was worth NOK 10,17. "The movements the past few months have been surprisingly similar," Østnor explains. He thinks that there is chance the Euro may be worth NOK 10 before Christmas. 

The significant fall in oil prices will hit the Norwegian economy in 2015. The consequence will be slower economic growth, lower salary growth, and higher unemployment. However, despite the drop, the consequences will not be too severe, DnB predicts.

"We are moving towards a soft landing for the Norwegian economy. However, the years ahead will be tougher than what we have been used to the past ten years," says Senior Economist at DnB, Kjersti Haugland.

The economy is expected to grow by 1,1 percent in 2015, less than half of the expected inflation. Unemployment will also rise up to four percent, according to DnB's prognosis. 

(NRK)

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  • 03 Jan 2019 0°C -9°C
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