More bad economic news from Spain sent the value of the Euro to its lowest levels against the Norwegian krone for nearly 10 years on Monday. Industrial exporters in Norway are once again viewing their own strong Norwegian currency as a threat.
One euro amounted to just NOK 7.36 on Monday, down from NOK 7.37 on Friday, which itself had been its lowest value against the krone in a decade. While Norwegians on summer holiday in Europe can enjoy even lower prices than they do at home, because of the favourable exchange rate for them as tourists, Europeans find Norway even more expensive than usual.
That’s because the cost of buying everything from timber to salmon to Norwegian industrial products is high compared to other countries where they’ll find a more favourable exchange rate. And that’s what worries industrial firms in Norway, as well as furniture makers and other businesses that already have foreign competitors with much lower labour costs than they do.
“What we’re seeing in the markets is a general weakness of the euro because of new anxiety in the euro zone,” Lars-Erik Aas of Nordea Markets told Norwegian Broadcasting (NRK) on Monday. Aas noted that Spanish interest rates are at their highest level since the 1990s, because of concern over the condition of Spanish banks. Two regions of Spain had to ask for support from the authorities over the weekend, added Aas, while interest rates rose to over 7 percent.
Scandinavian safe haven
Meanwhile, Norway’s strong oil-fueled economy has kept interest rates and unemployment low. The economic strength is still attracting lots of foreign capital, though, from investors who view most of Scandinavia as a safe haven for their money, reported newspaper Aftenposten. They seem willing to forego higher interest rates in return for safety in an otherwise turbulent economic world.
Norway’s central bank kept interest rates at record low levels when its executive board met for the last time before the summer holidays last month. The key lending rate has been resting at just 1.5 percent and doesn’t seem likely to be raised, according to economists.
Views and News from Norway/Nina Berglund
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