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Sunday, May 22, 2022

Currency weakens as stock markets fall

It suddenly cost nine Norwegian kroner to buy one US dollar on Monday afternoon, marking a significant weakening of Norway’s currency after a period of strengthening on high oil prices. Meanwhile, the Oslo Stock Exchange fell 3.45 percent in line with jittery markets around the globe.

It was a gloomy day for investors with little comfort from the Oslo Stock Exchange. PHOTO: newsinenglish.no/Morten Møst

Several analysts were calling it all a “correction,” but as investor Ivar Løge told newspaper Dagens Næringsliv (DN), it’s a correction “that’s quite strong. It’s impossible to say anything sensible about how far down this will go, but it can become quite a boomerang.”

The Oslo Stock Exchange is now down around 5 percent from the start of the year, and Monday’s trading resulted in its worst day since September 2020, according to business news service E24. Løge and others pointed to everything from political uncertainty in the US, a collapse in the Chinese real estate market, ongoing tension between Russia and most of the western world, and how tensions rose on Monday when NATO sent more troops to Eastern Europe and Russia annoyed Ireland with naval exercises a bit too close for comfort.

Shares in Norway’s biggest company, oil and energy firm Equinor, held up fairly well but other majors were battered including Aker BP (down 3.78 percent), Norsk Hydro (down 4.29 percent) and Yara International (down 3.49 percent).

The price of Norway’s North Sea crude oil also fell, even though it’s still at relatively high levels of nearly USD 86 a barrel. Lower oil prices, though, always hit the krone hard, and Monday was no exception.

Ingvild Borgen Gjerde, an interest rate- and currency exchange analyst at DNB Markets in Oslo, pointed to nervousness over what the US Federal Reserve Bank will do with interest rates on Wednesday. “That’s a risk event that can contribute to falling markets,” Gjerde told DN. “We’ve often seen that stock markets fall in advance of such events.”

Norway’s central bank, meanwhile, has already warned of interest rate increases throughout the year. Higher interest rates often send stocks down, while the currency is now being branded as “volatile” after gaining but now falling in value. One euro cost more than NOK 10 on Monday afternoon, also the highest in around a month.

newsinenglish.no/Nina Berglund

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