WANT A SHOPPING TRIP ACROSS THE DAM? Then the experts disagree on whether you should wait or leave soon. Photo: ED JONES / AFP
Thursday’s interest rate hike strengthened the Norwegian krone. That does not necessarily mean that Norwegians who like to travel should leave the country to go on holiday, we are to believe the experts.
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- The interest rate hike on Thursday strengthened the Norwegian krone, but that does not necessarily mean cheaper holidays for Norwegians.
- Interest rate and currency strategist Nils Kristian Knudsen believes the USA can be a lovely destination right now, but chief economist Jan Ludvig Andreassen recommends Turkey.
- The krone may continue to strengthen over the next year, but unforeseen events may affect the currency market.
Sea view
After Thursday’s some unexpected interest rate hikesthe krone immediately strengthened by around 10 cents against both the euro and the dollar.
Norwegians got a regular currency hit abroad throughout the summer. Suddenly the euro was to be multiplied by twelve, not eight.
The central bank assumes that the krone exchange rate will strengthen “somewhat in the future”.
Below you can explore the development of how many kroner you get for one euro and one dollar:
It does not necessarily have to be good news for holiday-loving Norwegians, who yearn for something other than a cold and dark winter in Norway.
– The starting point has improved, but there are several things you should be aware of before traveling abroad. Although the krone has strengthened a little, there are other factors such as inflation that play an important role, says interest rate and currency strategist at Handelsbanken, Nils Kristian Knudsen, to VG.
Thus, the future looks a little better, seen in the light of the interest rate hike from the Norwegian central bank.
On Thursday, the krone strengthened by just over two per cent, and after this we will leave a bit of a blank slate, says Knudsen.
– It is still expensive to travel abroad, emphasizes the strategist.
CURRENCY: The krone exchange rate has strengthened, after another interest rate hike on Thursday. Photo: Lise Åserud / NTB
Cheaper to travel to the USA
For Norwegians who take the currency news from the central bank with a smile, it may be more beneficial to go on holiday now than if you wait too long.
– Right now the dollar has weakened, and that means that it is now suddenly cheaper to travel to the USA, says Knudsen.
Many central banks around the world have been waiting to raise interest rates and also have a different inflation than we have in Norway.
STRATEGIST: Interest rate and currency strategist, Nils Kristian Knudsen, believes that Norwegians now have a better starting point in terms of currency, after the krone has strengthened. Photo: Bård Gudim
This can affect travel-loving Norwegians:
– The dollar has had a relatively large movement in a short time, and inflation seems to be going down in the USA. So my travel tip for Norwegians now is to go to the USA, that’s where you should go, given that you can afford it of course, says Knudsen.
At the same time, the interest rate and currency strategist reminds that the dollar is strong in a historical context, while the krone is historically weak.
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BN Bank believes that Norges Bank is missing the mark – dropping interest rate hikes
The bank with 16,000 loan customers is taking matters into its own hands and dropping Thursday’s interest rate hike.
Chief Economist: Look east
Eika’s chief economist, Jan Ludvig Andreassen, however, does not agree with Knudsen’s US tip.
– I think the dollar is still expensive and there is high inflation on hotel stays in, for example, New York. It is predicted that the dollar will go down, so there is hope in the hanging thread that it might be better to go to the USA next year.
– So you think you shouldn’t go there now?
– In that case, you should have very good advice, answers Andreassen.
He would rather look east if the urge to travel is unbearable for Norwegians:
– My hottest travel tip now is Turkey. Other typical countries Norwegians like to visit, such as Italy and Spain, have become more expensive. Despite the strengthening of the krone exchange rate, inflation is still high in tourism there.
BEACH LIFE IN TURKEY? The temperature is not quite suitable for swimming in Turkey at the moment, but the chief economist believes that it is in any case beneficial to travel here if you are thinking about your wallet. Photo: YASIN AKGUL / AFP / NTB
– A better starting point for a stronger krone
If inflation goes down, you still have to be prepared for news that blows in the wrong direction as well.
Knudsen at Handelsbanken encourages caution when thinking and talking about the currency market.
– I believe that we have a better starting point for a stronger krone going forward, but unforeseen events that occur can quickly change the picture. This is why you have to plan for the exchange rate to fluctuate a lot.
At some point the krone will strengthen, believes Andreassen too, who thinks it has been a bit odd that Norwegians have not been dampened by the high krone exchange rate.
– The krone has been disappointingly weak for a long time, against my expectations, but I have been wrong before. I think the krone will continue to strengthen in 2024 as well, says the chief economist.
WHERE SHOULD WE TRAVEL? Eika’s chief economist, Jan Ludvig Andreassen, recommends that Norwegians, in contrast to Knudsen, travel east. Photo: Mattis Sandblad / VGPublisert:
Published: 17.12.23 at 05:00
Updated: 17.12.23 at 07:28
2023-12-17 04:00:08
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