https://e24.no/norsk-oekonomi/i/MoLLJE/ny-kroneoverraskelse-fra-norges-bank?utm_content=forsiden_row1_pos1&utm_source=e24front&utm_term=df-47-of59d2ec%3Adf-47-of59d2ec

So recently the NOK has been dropping sharply and now the Norges Bank is devaluing it even further? What is the point of this? I passed most of my savings from EUR to NOK last time the Euro was particularly high (I did this at the advice of my family who have always had weird concerns that the EU would collapse some day) but now I’m worried I might be stuck with a potentially worthless currency. Anyone else worried?

5 comments

  1. I guess cash is like any other assets in that it has risks. If you have difficulties tolerating the risks of holding NOK, you should exchange it to something else that can let you sleep at night.

  2. Don’t worry. It will bounce back. Norway is a small and commodity driven economy. Two important factors for the NOK are:
    – The stability of oil prices
    – The overall economic climate of our trading partners

    Norges Bank will manipulate the krone to try and sustain a healthy balance of import and export (unfortunately for you, little thought is given to forex speculators). If NOK is too high relative to our trading partners, it puts our export-businesses at a disadvantage. On the other hand if the NOK is too low relative to our trading partners, import suffers.

    Norway is a small economy. We usually just follow the trends on the rest of the continent. For instance, during the 08 crash, we lowered our interest rate to the same level as EU although our economy was much healthier. We realized that with a higher interest rate than EU, the NOK would rise to unsustainable levels.

    NOK is a bad choice for a “safe haven” currency, especially for Euro-holders. We purposefully manipulate the NOK to follow the Euro. Oil prices will also affect the NOK, adding to the unstableness.

    That being said, the Norwegian economy is robust. You do not stand to lose your money, but owning NOK doesn’t buy you much of an insurance against a Euro collapse.

  3. Why do you save in cash? You’ve lost like 10% of your savings already due to inflation and weakening of NOK

  4. I am less upset about the savings losing value but more about getting a significant passive pay cut. I am working just as hard as before and getting paid 20-30% less accounting for currency devaluing and inflation. Savings themselves go up and down. Can’t do much about it other than be diversified and have long time horizons.

  5. Norges Bank sells NOK to carry out its responsibilities of managing the excess cash flow from the taxation of the petroleum sector on behalf of the government. NOK has to be sold in order to purchase foreign currency for which they can use to purchase foreign financial assets (popularly known as the “petrobuffer” and “the oil fund”). Norges Bank is not purposely devaluing the NOK.

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