[ad_1]
The crown is falling to its weakest point since the beginning of May this year. But the crown explosion cannot be explained based on how things are going with Norway, the expert believes.
The krone’s exchange rate falls to its clearly weakest level since Norway closed earlier this spring, when the krone fell to its lowest level.
- One euro now costs 11.15 crowns, compared to 10.4 crowns at the beginning of September.
- One dollar costs 9.5 crowns, up from 8.7 crowns on September 1.
- The currencies of our Swedish neighbors are also getting stronger and 100 Swedish crowns now cost 105 Norwegian crowns.
Actionsmell
The krona has weakened a bit further after the monetary policy meeting, but was already above 11.10 against the euro before the meeting and has fallen sharply in recent weeks.
Also read: Big drop in the crown exchange rate: – The mood has changed
Ole Håkon Eek-Nilsen, an analyst at Nordea Markets, believes that the explanation for the fall of the crown is mainly that equity markets around the world are falling. Over the past year, there was a clear connection between the crown and the US stock market index S&P 500.
– This comes from the stock market. When stock markets fall, the krona exchange rate reacts strongly. he tells Nettavisen.
Also read: Nordea predicts the impact of the crown: America vacations can be much cheaper after the crown
He thinks that it is the Norwegian managers who have protected themselves against a stronger crown by getting rid of that protection, which brings down the crown.
– Since there are not many others who buy NOK, it has a big impact, he says.
Lower
The weakening of the krone is now at its lowest level, with the exception of the situation in the period after Norway closed during the krone crisis. Eek-Nilsen doesn’t think the big drop is in line with the modest stock market crash.
– The drama in the stock market is not huge, so it is more than you can expect. This is basically more than the stock market should be able to get from the weakening of the crown, but it’s probably due to the fact that it will have a self-reinforcing effect as people become obsessed with it, he says.
Also read: DNB: This affects the crown more
A weak currency is generally perceived as a sign of a weak national economy, but Eek-Nilsen believes nonetheless that the weak krone is not about things going bad for the Norwegian economy. Rather, it singles out relatively few investors cutting the krona exchange rate in a market where there are otherwise few transactions, creating an unnatural shock.
– It is not logical based on fundamental conditions, but some trades that take the course to irrational levels. If you look at the crown crisis, Norway has done better than the rest of Europe and we also have money from the oil fund. It is not negative for the crown, but will still be postponed by a stock market crash, he says.
[ad_2]
