It cost as much as NOK 8.32 to buy one US dollar on Monday, after the Norwegian krone fell to its weakest point since the finance crisis. Higher oil prices are no longer enough to keep the oil-producing country’s currency strong.
The krone has been weak all autum and especially the past few weeks. Analysts have been puzzled, not least since Norway’s economy continues to recover from the plunge in oil prices in 2014. After falling below USD 30 a barrel, the price of Norway’s single biggest export product has recenly risen to nearly USD 64, a jump that normally would send its currency up as well.
Analysts have lately been pointing to concerns about falling housing prices and, just before the weekend, new retails sales figures from state statistics bureau SSB that declined for the third month in a row. The latter also shows a decline in Norwegians’ desire to go shopping. Higher oil prices, one analyst told newspaper Dagens Næringsliv (DN), aren’t enough to offset such worries, with US investment bank Morgan Stanley recently noting that Norway isn’t selling as much oil to the world as it once did.
The krone strengthened slightly against the euro and the pound, though, and Norwegian industry and export businesses welcome the weaker krone. It makes their products far more competitive because their prices are cheaper in dollars, for example, than they were. Tourism also benefits because Norway’s high prices aren’t so shocking for foreigners, while travel abroad for Norwegians becomes more expensive.