Krone, Kronen | Huge fall for the krone exchange rate:

The krone exchange rate weakened sharply on Monday morning, both against the euro, the dollar and the Swedish krona.

Against one euro, one kroner now costs 10.85 kroner, against 10.35 kroner in early September. The krone is now at its weakest point in June.

The decline comes in parallel with a sharp fall on the stock exchanges, where the Oslo Stock Exchange is down as much as three percent.

Pessimism

– It is difficult to say exactly what this is that makes the krone weaken so much, but we had a slightly weak week last week and it continues that week here, says Magne Østnor, currency analyst at DNB, to Nettavisen.

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He points out that increased pessimism about the corona situation is contributing to the decline. The pressure of infection in Europe has increased in recent weeks and many fear a new shutdown similar to the one we had in March. In such cases, the krone tends to weaken because investors then flock to safe currencies such as the dollar and the euro.

– The mood has changed. The economy is no longer in gradual cautious improvement anymore, and that affects the krone exchange rate, says Østnor.

Also read: DNB: This affects the krone the most

Duete central bank

Østnor also believes that the interest rate meeting at Norges Bank in three days’ time may have had a negative effect on the krone exchange rate. It is not expected that Norges Bank will show signs of raising interest rates immediately, which in that case would be positive for the krone strength.

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– Many had expected Norges Bank to come out on the hawkish side and be more concerned with financial stability, but it is about to turn around, we do not think so anymore and may lean the other way instead, says the DNB economist .

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