Stocks recover but krone stays weak

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Norwegian share prices and foreign exchange rates continued to swing in the midst of more market turbulence on Thursday. Share prices rose, but the krone remained weaker than it’s been for more than a decade.

New figures from Statistics Norway show a sharp drop in the number of job advertisements over the past year, signalling tougher times ahead. Consumer confidence is nevertheless continuing to recover, with regards to both Norwegians' personal finances and the expectations for the national economy. PHOTO: Norges Bank

These 200-krone notes, arguably used most often in Norway, only cost USD 24 on Thursday, down from USD 33 just over a year ago. PHOTO: Norges Bank

It cost more than NOK 8.30 to buy one US dollar for most of the day in Norway, the weakest showing for the krone in 13 years. The fall-off began on Wednesday, and website E24.no was reporting that a US dollar hadn’t cost so much since May 15, 2002.

The krone also weakened against the euro, which cost as much as NOK 9.52 late Wednesday but slipped to NOK 9.38 by mid-afternoon on Thursday. One British pound cost 12.86.

Share prices in Norway’s biggest companies, meanwhile, were logging gains, with aluminum company Norsk Hydro up fully 4.04 percent to NOK 28.08 per share and offshore firm Seadrill up 2.66 percent, to NOK 56. Norway’s biggest bank, DNB, and Yara International also logged gains as did the country’s biggest company, Statoil. It was up 1.43 percent to NOK 120.90 just before 3pm, with the main index on the Oslo Stock Exchange up 1.5 percent after a big decline earlier in the week.

Erica Blomgren, chief strategist at SEB, said there was still “enormous uncertainty” in the markets, though, while Swedbank’s chief economist, Harald Magnus Andreassen, cautioned against being overly optimistic because of the stock market rally and even a rise in oil prices after several days of decline.

“I’m still very uneasy that China is on the wrong course,” Andreassen told newspaper Dagens Næringsliv (DN). Nerves had eased, he noted, but he said there was still “considerable over-production” of oil and prices were volatile.

Many analysts heaved a sigh of relief when Chinese authorities cut the country’s key interest rate and lowered reserve requirements, with both moves expected to stimulate the economy of the huge country whose sheer size and consumer demand influences the economies of other countries around the world including Norway. DN reported on Thursday, for example, that exports to China by car parts producer Raufoss Technolgy were due to decline by 30 percent this autumn because of the country’s economic slowdown.

Meanwhile, DN reported that SEB reduced its expectations for oil prices and downgraded Statoil’s shares on Thursday. SEB noted that oil prices had mostly been in free-fall while costs remain high in the oil business even though they’ve come down. SEP now thinks the oil industry’s exploration and production investments will fall by 15 percent next year.

newsinenglish.no/Nina Berglund

  • RC

    Arguably the title of this article should actually be ‘Krone value
    normalised’. The old crisis is over and the new around the corner; hot funds
    are returning back to their usual haunts away from safe havens and EM.

    The new global ‘low growth’ crisis doesn’t suit Norway and with the oil price
    likely to remain stubbornly low for years to come unlikely to prop up the
    currency.

    I’d fully expect a further weakening given I’d expect Norway to delay
    any rates increase and instead maintain ultra low rates to stimulate demand.

    So outside a massive economic liberalisation and stimulus program perhaps
    underwritten by the oil fund its dark times ahead. Best case I expect a
    stagnant executive to grab a few headlines by spending a bit of money from the
    fund. However they will no doubt refuse to move on all the real issue such as
    free trade, subsidies, deregulation, etc.

    Best to take advantage of the rate where it is now before it sinks
    further…perhaps invest in Euroland before the currency takes off.

    • frenk

      …..I suppose…I must ask…..why were taxes not cut when the ‘times were good’…..and the answer…is as above…’However they will no doubt refuse to move on all the real issue such as
      free trade, subsidies, deregulation, etc.’….if there is no competition in an economy…and people have more money to spend…and the ability to borrow at multiple times their salary….then prices will steadily increase……
      But….if the government were to remove the protectionist tariffs protecting Norwegian farmers….thus allowing ‘foreign supermarkets’ to enter the Norwegian economy….this could be the start of much needed change?