– Although the exchange rate is good, it is still very expensive here compared to Vienna, says Alexa Coleman from Austria. But enjoying the sun in Frognerparken is free. And Coleman was warned against Norwegian prices by her fellow student Kaja Guttormsgaard, whom she visits together with Pamina Lantos from Canada. – The weather is fantastic and the people are kind. It’s definitely not cheap here, but better than expected, because the euro is so strong against the krona now, says Lantos, who studies in Paris. Their Norwegian host has been in Tokyo on holiday. – The Japanese yen is quite weak now, as is the krone, she says. – We have prepared a budget to “survive” the trip, says Alexa Coleman. Photo: Glenn Aaseby / news – Coffee and food are cheaper in Paris, not to mention the wine, says Lantos, laughing. Photo: Glenn Aaseby / news – I planned to travel to Japan well in advance, so it was not so premeditated in terms of the exchange rate. But it worked well, says Kaja Guttormsgaard. Photo: Glenn Aaseby / news Strong drop in the krone before the weekend After the drop in the krone rate on Friday, 1 euro now costs almost 12 kroner, while 1 dollar now costs almost 11 kroner. From a train sliding across the “Italian boot”, chief economist at Sparebank 1 Markets, Harald Magnus Andreassen, says that he notices it in his wallet. – When I paid the restaurant bill last night, the euro was more expensive than it has been for quite some time, he says. Because the euro has not cost so many kroner since November last year. From a partly cloudy Gran Canaria with 25 degrees Celsius, chief economist at DNB markets, Kjersti Haugland, says that she paid “a lot” of the trip in advance. – For Norwegians abroad, it will be more expensive now, she says. Chief economist at DNB markets, Kjersti Haugland. (Sola came forward after news did the interview with her, according to Yr.no.) Photo: Privat Why did the krone fall so sharply? Andreassen points out that the oil price also fell on Friday. And that other currencies, such as the Swedish and the Canadian, fell as much as the Norwegian this week. – Globally, stock markets have been sour all week, he says. The currency market is also affected by the fact that many investors are on holiday, says Haugland from “Granca”. – And that means that the movements, when they happen, are typically bigger than when there are more people out shopping at the market, she says. Inflation, which Norges Bank monitors closely, fell faster than expected. This became known when the inflation figures came out two weeks ago. And has influenced the krone exchange rate, according to the chief economist at DNB markets. – Then the markets began to price in that perhaps Norges Bank will not wait until March next year to cut the interest rate after all, says Haugland. – The new normal Ten years ago, 1 dollar cost around 6 kroner. 1 euro costs around 8 kroner. Haugland says that almost 12 Norwegian kroner for one euro, which he costs today, is actually not that unusually weak. According to their forecasts, Norwegians should get used to this: – This is the new normal. But even if we have to settle for considerably more expensive trips to the USA and Europe than ten years ago, Haugland believes the krone will strengthen a little again soon. – I think the devaluation of the krone has gone a bit too far now, she says. Chief economist Harald Magnus Andreassen, Sparebank 1 Markets. Photo: Sparebank1 Markets / CF-WESENBERG Andreassen at Sparebank 1 also believes that it is unlikely that Norwegians will soon be able to make do with as cheap Mimosas in New York, or cheeses in Paris, as we could in 2014. Much of the fall in the krone exchange rate in the last ten years The reason is that the krona was far too strong in 2014, he believes. – Things went well in the Norwegian economy. Oil prices were high and oil investments were high. It gave a price and wage level that was far too high, he says. Andreassen thinks we have gone from one ditch to the other. – I think the krone exchange rate is too weak now. When foreign tourists go to Norwegian shops to buy clothes, something is wrong. We must be a high-cost country. Today we have probably become a bit too cheap. – So I think that the krone exchange rate will strengthen in the coming years, says Andreassen. If you are inspired by “Team Bachstad’s” trip through Japan, which is shown on news TV no, the chief economists at DNB markets and Sparebank 1 markets urge you to check the flight price before booking a hotel. Photo: news Not a uniquely Norwegian phenomenon Several Norwegians are now holidaying just outside the Eurozone, for example in Albania, or much further afield, for example in Japan. You do not need to travel further than across the border to Sweden. There you will find a holiday country where the fall in the krone exchange rate is not felt as much on the restaurant bill as it was for Andreassen in Italy on Friday evening. Because as before, it wasn’t just the krona that fell in value against the dollar and euro this week. – We saw that exchange rates that normally fluctuate in the same way as the krone exchange rate does, the Swedish krone, Australian and Canadian dollars, they also fell yesterday. And they have fallen as much as the Norwegian krone in the last week, says Andreassen. The chief economist at DNB markets also took his holiday to southern Europe this year, despite the more expensive euro. From partly cloudy and 25 degrees on “Granca”, Haugland advises that holidays to Euro countries with lower price levels than Norway, such as Spain, can still be cheaper than trips to, for example, Japan, even if the Yen is also weakened. – Even though the krone exchange rate has weakened against the current currency, it can still be beneficial to travel to countries with low price levels based on Norwegian conditions, she says. Andreassen also encourages more calculated travelers to think twice, so that the winnings don’t end up in spinning… or flying. – A plane ticket to Japan costs much more than a cheap seat ticket to the Mediterranean. And then you have to be careful not to pay an expensive plane ticket to Japan to save a few kroner on the course, he says. Published 20.07.2024, at 18.26
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Strong krone fall: – The new normal
