“Why Norway’s Krone is Weakening and How it Affects the Economy”

(North Norwegian debate): The krone is among the currencies in the world that have weakened the most since the New Year. The European Central Bank, the ECB, has distinguished itself with many rapid and large interest rate hikes.

They are likely to continue raising interest rates at the next meetings, perhaps with double rate hikes.

In contrast to previous times, the EU now has a key interest rate that is either equal to or higher than the Norwegian one, and then investors would rather put their money in the eurozone than in Norway.

When fewer people want to buy Norwegian kroner, it also becomes cheaper. Lower demand = lower price.

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The international impression is that Norges Bank has problems keeping up with the countries around us when it comes to setting interest rates. This is due to the high debt of our households, where most have floating mortgage interest rates. Fixed interest was a clever idea in its day.

In order for it to become attractive to place money in Norway again, the interest rate must rise to at least five percent.

The Norwegian krone is a tiny currency, which is considered very uncertain and risky to invest in. When there is a lot of fear and uncertainty, investors do not want to buy Norwegian krone – and then they become less valuable.

They then prefer to buy major currencies that are seen as more secure, such as the euro and dollar. And the billionaires flee the country and take their money with them, which they invest abroad.

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The Danish krone and the Swedish krone are tied to the euro. This means that the central banks there constantly ensure that the euro and Danish/Swedish krone exchange rate is always the same, what is called a fixed exchange rate policy. Therefore, the Norwegian krone also weakens in relation to the Danish and Swedish krone.

Norway imports goods, and it becomes more expensive for us consumers. Because there is a delay in when the krone exchange rate has an effect on prices, it will only be properly felt in the long run.

The buying spree is now curtailing, and it is the increased interest rates that are the main reason.

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Falling oil and gas prices also weaken the Norwegian krone and the industries make up an ever smaller share of the Norwegian economy. Never a good idea to put so many eggs in one basket.

Abroad, it is not fun to trade with shitcoins, i.e. Norwegian kroner. Norwegian financial policy is completely in shambles, and most people are affected.

In the light of hindsight, one wonders how this collapse could have been avoided. The devaluation of the krone is not finished, it is here to stay and puts pressure on Norges Bank for further interest rate hikes.

Borrowers must expect mortgage interest rates well into the five figures. And a euro that costs at least NOK 12. So what is the solution? Will it be better if we join the EU?