The euro below 11 crowns for the first time since the start of the crown crisis – E24

There have been heavy days for the Norwegian crown after the crown crisis led to the closure of large sectors of society on March 12.

A sharp drop in oil prices due to lower demand has also helped weaken the crown to entirely new levels.

However, on Tuesday night, the crown exchange rate strengthens, and a euro is now worth less than 11 crowns for the first time since the virus crisis began.

Previously, the crown was rarely weaker than the dollar was worth nine crowns and the euro a little more than 10 crowns.

In mid-March, the crown depreciated to entirely new levels, peaking on March 19, when the euro at one point was worth more than 13 kroner and the dollar above 12 kroner.

There is a considerable weakening from the already weak level at the turn of the year. At that time the euro was at 9.83 crowns and the dollar at 8.76 crowns.

Olsen had to intervene

Then the central bank governor, Øystein Olsen, appeared in the field, announcing that he was considering stepping in and making extraordinary crown purchases in the market, where there was very little trade. The grip was meant to counter the dramatic drop in the crown.

– I expect the most predictable currency so that we don’t experience such wedges. It’s good for everyone, ”bicycle importer Olav M. Hagen told E24 after the central bank announced it was considering intervening.

On March 20, the day after the crown depreciation was worse, Olsen again cut interest rates from 1 percent to 0.25 percentage points.

– By pointing out possible monetary interventions yesterday and cutting interest rates today, the bank says it will use all of its tools to balance the economy, Kyrre Aamdal wrote in DNB Markets on March 20.

Cut again

On May 7, Norges Bank cut interest rates again, to the all-time low of zero percent. Later, the bank also confirmed that it had intervened (intervened) in the currency market, with extraordinary purchases of NOK 3.5 billion.

– It is not very complete, but it was necessary and correct. And we think it also worked in the situation we find ourselves in, ”Olsen said at a press conference on May 7.

Olsen has found several tools that are used very rarely or never. Zero interest rates have never occurred in Norway before. And Norges Bank has not been involved in the crown since 1999.

The crown has strengthened somewhat after the dramatic days of March 19, in part because the uncertainty in global markets has eased somewhat. However, the crown is still much weaker than ever.

More expensive for Norwegians

With a crown as weak as Norway’s now, it will be more expensive for Norwegians to buy products from abroad. You can also drive inflation here at home.

In April, core inflation rose 2.8 percent from a year earlier, including lifting more expensive imported foods, such as fruits and vegetables, because the crown has weakened.

Core inflation (CPI-ATE) measures price growth, excluding tax changes and electricity and fuel prices.

Debt in foreign currency also becomes more expensive for Norwegian companies. The weak crown has led companies like Yara and Hydro to post monetary losses in the first quarter.