A strong economy and low unemployment didn’t stop currency traders this week from letting the Norwegian currency, the krone, fall to its weakest level against the US dollar since the pandemic first hit the country in March 2020.
It cost NOK 9.93 to buy one US dollar on Tuesday morning. By Tuesday evening it cost NOK 10.02, and it wavered around that level for the rest of the week. A euro cost NOK 10.44 and a British pound cost NOK 12.02.
Analysts noted that the Norwegian krone has a tendency to weaken when risk in the global finance markets increase. Monday’s diving stockmarkets around the world may have played a role, but the US dollar is also very strong. It’s still seen as among the world’s safest currencies, especially in times of trouble. Russian President Vladimir Putin’s war on Ukraine has stirred up much trouble indeed.
The value of the krone against the dollar is now the weakest since May 2020, when it cost as much as NOK 11 to buy a dollar, or even more. Commentators at Oslo newspaper Dagens Næringsliv (DN) also noted that liquidity in the Norwegian interest rate market is drying up and investors are looking for “safe harbours,” like the dollar and the euro.
Norway’s central bank is widely expected to raise interest rates next week, in an effort to bring down the country’s rising inflation rate. That may also strengthen the krone somewhat.