For the first time in 13 years, the US dollar was trading at just over NOK 8 on Tuesday. The move reflects an ongoing weakening of the Norwegian krone at a time when business optimism in Norway is also declining, and not just because of the fall in oil prices.
“This is high,” currency exchange analyst Magne Østnor at Norway’s biggest bank, DNB, told newssite DN.no on Tuesday. The US dollar was also strengthening against other European currencies and was trading at NOK 8.04 at mid-day.
Norway’s currency started its decline last year, when oil prices began to tumble. After moving back over the USD 60 mark recently, they since slid back to USD 58 a barrel, but it’s not just the oil price decline that’s affecting the exchange rate against the US dollar.
Østnor cited, for example, last week’s release of labour statistics in the US that were must stronger than expected. There also are expectations that US interest rates will rise from rock-bottom levels, while the European Central Bank has started buying bonds from euro zone countries.
Norway’s own economic indicators have been slipping as well, and the leader of the national employers’ organization NHO told newspaper Dagens Næringsliv (DN) on Friday that business optimism in Norway continues to decline. A new NHO survey shows that one out of four NHO members plans to cut business investment. Only 11 percent plan to boost investment, and that’s not good news for the government’s plan to steer the Norwegian economy away from oil and gas and into new ventures.
It hasn’t taken so many Norwegian kroner to buy a US dollar since May 31, 2002, DN.no noted. A weaker kroner, though, is good for Norwegian export industries that recently have found their products more competitively priced abroad, while foreign revenues and reserves can convert into more kroner at home. For Norwegians themselves, who have enjoyed a record strong krone for several years, the prices of imported goods will rise at home and trips abroad will become more expensive.