Nothing happened brother. This type of downs happen when no one recognises the currency hence making the currency drop. The more abundance of a currency and low buyers makes the currency value drop and vice versa makes it rise.
Guess Norwegian currency isn’t as attractive compared to larger, more stable currencies such as the euro and dollar, given these uncertain times? I don’t know 🤷
It’s a combination of low interest rates compared to euro zones and US. Norwegian bank (Norwegian equivalent of FED) net selling Norwegian kroner (~1,4B NOK per day). And a volatile oil price and demand.
E: numbers
Other currencies has more transactions. So those who deal with currency trading don’t want to be stuck holding NOK in times when they are risk averse.
Also other countries has higher interest.
It’s a bit out of our hands really. It also has some benefits in that Norwegian production of good that is exported, we have better bargaining power
Erratic governments creating an unstable investing environment for foreigners. Rules changing every other year, and the supporting parties threathen to destroy even more than they already have managed.
Combined with low interest rates and a small economy, this makes for a large drop.
Out national bank think is the best way to stabilize the economy long term and it’s probably correct
It’s like “IF” an American state refusing to have $ as a currency !
Even though Norway has a great and stable economy, the rest of the world looks upon us as a kind of banana republic, so when times are tough in the world, nobody wants to buy the NOK. There is nothing wrong with Norways’ economy, though, at least compared to most other economies.
Currency is not the same as economy. Oil and gas is traded in dollar, which makes a lower NOK more money when the dollar goes up, same with salmon, fish and other export products i guess.
Norway has a much lower intrest rate than other countries.
AP+SP+SV = failure. Always has been, always will be.
Anyways, it will last to 2025.
The government happend! They have sent out the signal of stopping oil production, and also increasing taxes all over. The results of this is that foreign investors don’t want to invest here, and also pulling investments out.
Also mentioned earlier here by someone else, just to top it all, Norwegian FED are selling too much Kroner to be stabilized.
Its because our country is led by fools. Quite litterly ruining our economy, not only what NOK is worth, but its horrifying seeing so much shit happening, and all the citizens just sit here and be like “mmmKaaaaayy” or “this sucks”, then do nothing about it, other than to rant on a freaking social media platform, that makes nothing happend, because only people who cant do shit see it, or those who can, actively try to ruin everything.
I think it’s due to the increased government spending during Covid and the increase of energy prices due to the Russian invasion of Ukraine.
Too many folks are credited too much. Interest rates kicked in and people struggle to pay for food/bills. It was good article in BT about situation in Norwegian households – among 30-39yo 38% pay monthly invoices by credit cards and 27% use credit to pay for groceries.
Knuckle headed politician made sure the employers fled the country with ridiculous taxes to ruin value creation. Well look what happens when workers got no employers left and tax payers money are getting spent on woke shit.
It’s a combination of several factors:
Norwegians have one of the highest personal debt in the world, especially tied to the house but also cabins / cars / boats etc. Norwegian central bank can’t raise interest rates as much as EU or USA not to bankrupt everybody, and the differential in interest rates is part of the problem. Interest rates should be at 5% already.
Norwegian bank is also selling a lot of NOK every day, which weakens the currency. This should hopefully stop or be reduced from June, lifting a bit the pressure from the NOK. But if interest rates remain low and the global economic outlook uncertain, the NOK may keep falling regardless.
In uncertain times, small currencies get hammered.
People that say the weak NOK is not a problem don’t understand that Norway imports a lot more than it exports, almost nothing is manufactured in Norway. A weak currency means we’ll import inflation from outside. Buying vegetables from EU countries for example we will pay their inflation + we will pay in a devalued currency. And Germans can buy Norwegian electricity even cheaper paying in euro.
There will be a EUR/NOK conversion rate that will make Norway really unattractive to skilled foreign workers, and most likely make it unattractive to Norwegian skilled workers as well. If the exchange rate goes to 14 for example why work in Norway for 700k NOK if at the exchange rate it’s worth 50k EUR and live in a very expensive cold country when you can make 40k EUR in Spain or Italy and live in a cheap country with great weather? When 700k were worth 80k EUR that was making sense, but now or in the future?
It’s troublesome to see the currency plummeting like this, it’s just a straight line down, doesn’t look it has any support.
Hmmm. I think putin and the new goverment is illuminati and wanna buttfuck us all. God bless NAV
Well first of the currency isn’t “the economy”, it’s one of many facets. One might argue the depreciation of NOK is caused by three factors (One of which is that the economy is going too well!)
1. Due to the rise in energy prices government revenues have soared. Norway has a policy of placing the excess revenue from its fossil fuel sector into the sovereign wealth fund. The sovereign wealth fund exclusively invests in foreign assets due to diversification and liquidity. In order to buy these foreign assets the fund needs to convert its kroner to other currencies. All else equal the sale of kroner is a positive supply shock and pushes the price of NOK down.
2. The Norwegian central bank is lagging other central banks rate hikes. All else equal higher interest rates increase the value of a currency. So comparatively owning NOK is less attractive.
3. During times of high volatility investors tend to prefer “safe haven” currencies such as USD to more volatile and resource price dependent currencies such as NOK. This lessens the demand for NOK and drives the price down
You will get many answers to questions about economics and inflation in S. Ammus’s book “The Bitcoin Standard: The Decentralized Alternative to Central Banking”.
By the way, on his Twitter he recommended to pirate it and gave a link where to download it.
Honestly, this is due to a combination of factors. Main contributors (from my perspective) are the oil price reduction, low interest rates compared to EU & US, recent unpredictable tax laws that have been implemented with short warnings, and the negative signal that the migration of a lot of rich people to Switzerland give foreign investors.
Additionally, Norges Bank is selling a LOT of nok to compensate for taxes that oil companies will be paying. As the income for oil companies reached record levels last year there are a lot of tax that needs to be paid. However, the oil companies are not buying Nok at the same time as norges bank is selling.
Crude and NatGas take up more than 50% of Norway’s export by value. Go overlay the crude oil chart to the NOK/EUR or NOK/USD. You will see why NOK has outperformed EUR from Jan2020 to Mar2022 and underperformed from Mar2022 to now.
Taxes, man; taxes happened. Nobody wants to invest in Norwegian productivity when the state is going to grab more than half of it.
Oil and natural gas prices are down. This could mean demand has decreased. If so, there are less people buying Norwegian Kroner to buy Norwegian petroleum products.
25 comments
Nothing happened brother. This type of downs happen when no one recognises the currency hence making the currency drop. The more abundance of a currency and low buyers makes the currency value drop and vice versa makes it rise.
Guess Norwegian currency isn’t as attractive compared to larger, more stable currencies such as the euro and dollar, given these uncertain times? I don’t know 🤷
It’s a combination of low interest rates compared to euro zones and US. Norwegian bank (Norwegian equivalent of FED) net selling Norwegian kroner (~1,4B NOK per day). And a volatile oil price and demand.
E: numbers
Other currencies has more transactions. So those who deal with currency trading don’t want to be stuck holding NOK in times when they are risk averse.
Also other countries has higher interest.
It’s a bit out of our hands really. It also has some benefits in that Norwegian production of good that is exported, we have better bargaining power
Erratic governments creating an unstable investing environment for foreigners. Rules changing every other year, and the supporting parties threathen to destroy even more than they already have managed.
Combined with low interest rates and a small economy, this makes for a large drop.
Out national bank think is the best way to stabilize the economy long term and it’s probably correct
It’s like “IF” an American state refusing to have $ as a currency !
Even though Norway has a great and stable economy, the rest of the world looks upon us as a kind of banana republic, so when times are tough in the world, nobody wants to buy the NOK. There is nothing wrong with Norways’ economy, though, at least compared to most other economies.
Currency =/= Economy
everything explained here: https://corporate.nordea.com/article/81924/nok-update-eurnok-at-12-in-sight?fbclid=IwAR2LIMYpnpodz00A_pwQVcDUeS8hSP5ERX0NKeNEeje1XOeG3ySYbSYOl0A
Currency is not the same as economy. Oil and gas is traded in dollar, which makes a lower NOK more money when the dollar goes up, same with salmon, fish and other export products i guess.
Norway has a much lower intrest rate than other countries.
AP+SP+SV = failure. Always has been, always will be.
Anyways, it will last to 2025.
The government happend! They have sent out the signal of stopping oil production, and also increasing taxes all over. The results of this is that foreign investors don’t want to invest here, and also pulling investments out.
Also mentioned earlier here by someone else, just to top it all, Norwegian FED are selling too much Kroner to be stabilized.
Its because our country is led by fools. Quite litterly ruining our economy, not only what NOK is worth, but its horrifying seeing so much shit happening, and all the citizens just sit here and be like “mmmKaaaaayy” or “this sucks”, then do nothing about it, other than to rant on a freaking social media platform, that makes nothing happend, because only people who cant do shit see it, or those who can, actively try to ruin everything.
I think it’s due to the increased government spending during Covid and the increase of energy prices due to the Russian invasion of Ukraine.
Too many folks are credited too much. Interest rates kicked in and people struggle to pay for food/bills. It was good article in BT about situation in Norwegian households – among 30-39yo 38% pay monthly invoices by credit cards and 27% use credit to pay for groceries.
Knuckle headed politician made sure the employers fled the country with ridiculous taxes to ruin value creation. Well look what happens when workers got no employers left and tax payers money are getting spent on woke shit.
It’s a combination of several factors:
Norwegians have one of the highest personal debt in the world, especially tied to the house but also cabins / cars / boats etc. Norwegian central bank can’t raise interest rates as much as EU or USA not to bankrupt everybody, and the differential in interest rates is part of the problem. Interest rates should be at 5% already.
Norwegian bank is also selling a lot of NOK every day, which weakens the currency. This should hopefully stop or be reduced from June, lifting a bit the pressure from the NOK. But if interest rates remain low and the global economic outlook uncertain, the NOK may keep falling regardless.
In uncertain times, small currencies get hammered.
People that say the weak NOK is not a problem don’t understand that Norway imports a lot more than it exports, almost nothing is manufactured in Norway. A weak currency means we’ll import inflation from outside. Buying vegetables from EU countries for example we will pay their inflation + we will pay in a devalued currency. And Germans can buy Norwegian electricity even cheaper paying in euro.
There will be a EUR/NOK conversion rate that will make Norway really unattractive to skilled foreign workers, and most likely make it unattractive to Norwegian skilled workers as well. If the exchange rate goes to 14 for example why work in Norway for 700k NOK if at the exchange rate it’s worth 50k EUR and live in a very expensive cold country when you can make 40k EUR in Spain or Italy and live in a cheap country with great weather? When 700k were worth 80k EUR that was making sense, but now or in the future?
It’s troublesome to see the currency plummeting like this, it’s just a straight line down, doesn’t look it has any support.
Hmmm. I think putin and the new goverment is illuminati and wanna buttfuck us all. God bless NAV
Well first of the currency isn’t “the economy”, it’s one of many facets. One might argue the depreciation of NOK is caused by three factors (One of which is that the economy is going too well!)
1. Due to the rise in energy prices government revenues have soared. Norway has a policy of placing the excess revenue from its fossil fuel sector into the sovereign wealth fund. The sovereign wealth fund exclusively invests in foreign assets due to diversification and liquidity. In order to buy these foreign assets the fund needs to convert its kroner to other currencies. All else equal the sale of kroner is a positive supply shock and pushes the price of NOK down.
2. The Norwegian central bank is lagging other central banks rate hikes. All else equal higher interest rates increase the value of a currency. So comparatively owning NOK is less attractive.
3. During times of high volatility investors tend to prefer “safe haven” currencies such as USD to more volatile and resource price dependent currencies such as NOK. This lessens the demand for NOK and drives the price down
You will get many answers to questions about economics and inflation in S. Ammus’s book “The Bitcoin Standard: The Decentralized Alternative to Central Banking”.
By the way, on his Twitter he recommended to pirate it and gave a link where to download it.
Honestly, this is due to a combination of factors. Main contributors (from my perspective) are the oil price reduction, low interest rates compared to EU & US, recent unpredictable tax laws that have been implemented with short warnings, and the negative signal that the migration of a lot of rich people to Switzerland give foreign investors.
Additionally, Norges Bank is selling a LOT of nok to compensate for taxes that oil companies will be paying. As the income for oil companies reached record levels last year there are a lot of tax that needs to be paid. However, the oil companies are not buying Nok at the same time as norges bank is selling.
Crude and NatGas take up more than 50% of Norway’s export by value. Go overlay the crude oil chart to the NOK/EUR or NOK/USD. You will see why NOK has outperformed EUR from Jan2020 to Mar2022 and underperformed from Mar2022 to now.
Taxes, man; taxes happened. Nobody wants to invest in Norwegian productivity when the state is going to grab more than half of it.
Oil and natural gas prices are down. This could mean demand has decreased. If so, there are less people buying Norwegian Kroner to buy Norwegian petroleum products.