The panicked financial turmoil in recent days has further weakened the krone. Now the euro costs over 12 kroner and the dollar over 11 kroner. For a long time, the status quo has been that the krone exchange rate is something that neither the Storting nor the government should interfere with. The market regulates itself and Norges Bank’s mandate must remain firm. They must manage the interest rate according to a target of keeping price growth down to 2 per cent and the exchange rate must be floating, that is, the krone exchange rate is determined by supply and demand on the international market. This is in contrast to Denmark. They do not have a concrete inflation target, but a target to keep the Danish krone stable against the euro. This is similar to how it was also in Norway until 2002. Then the krona was pegged against a bunch of European currencies. Want a commission More people are now open to putting monetary policy under the microscope. In Aftenposten this week, fiscal policy spokesperson in Venstre, Sveinung Rotevatn, advocated what he calls a “krone commission”, which can look at new ways to set the krone exchange rate, such as linking the krone to the euro as the Danes do with their krone. Sveinung Rotevatn in Venstre wants an investigation into what alternatives we have to the current interest rate and currency policy. Photo: William Jobling / news He explains to news why he believes such a commission must be set up. – Now I see in the newspapers every day a new economist who has a new explanatory model for why the krona is weakening. I think we need some common knowledge that is agreed upon. Both about what has happened and the prospects for the krone going forward. Now several Storting politicians are following suit with what they think about possible policies to save the krona. Open to changes One of them is Kari Elisabeth Kaski. She is fiscal policy spokesperson for the Socialist Left Party (SV). – The weak krona will be a challenge if it leads to persistently high inflation and therefore higher interest rates over time. It should be considered to incorporate exchange rates into the central bank’s mandate and to look at the bank’s instruments beyond the interest rate, says Kaski before adding: – But it is something we should take our time to discuss. SV’s Kari Elisabeth Kaski believes that Norway must have ice in its stomach in the face of a weak krone. Photo: William Jobling / news Kaski believes hasty decisions about the krone exchange rate can have serious consequences for most people and points to increased unemployment and lower wages as possible outcomes. She will have none of that. – Although it is not desirable for a continued weakening of the krone exchange rate, we should have ice in our stomachs, says the SV deputy leader, who also believes that the current situation is a normalization rather than a crisis. Rødt rejects euro solution Rødt leader Marie Sneve Martinussen agrees. A weak krone exchange rate means that goods imported by Norway become more expensive, which in turn can be a strain on Norwegian wallets. Therefore, a weak krone can lead to interest rate increases so that Norwegian consumers spend less money. The aim is then to get control of price growth. Martinussen wants to avoid higher interest rates. – Therefore, Rødt will investigate whether Norges Bank should be given more tools than the interest rate in monetary policy, as LO has also advocated. Rødt leader Marie Sneve Martinussen has no faith in getting the euro to Norway, but will investigate whether Norges Bank needs more tools to overcome the weak krone. Photo: Lise Åserud / NTB But she wants nothing to do with the euro. – I still believe that the advantages of having your own currency, and thus control over your own interest rate, are greater than the disadvantages, so introducing the Euro is certainly not a good solution. If Norway had received the euro, we would have been linked to the European Central Bank instead of the Norwegian one. You would then also have had to deal with their determination of the interest rate. Points to the economic policy Hans Andreas Limi in the FRP does not want to tie the krona to the euro or another currency either. And also rejects the proposal for m crown commission. He believes that it is the economic policy that is the reason why the krona has weakened so much. – The fiscal policy this government has pursued has weakened confidence in the Norwegian economy. We need predictability and an economic policy that can restore confidence in our economy and in the krone. FRP’s Hans Andreas Limi believes the reason for the drop in the krone exchange rate is that investors do not want to invest in Norway because of fiscal policy. Photo: William Jobling / news Rotevatn emphasizes that he and Venstre are not proposing to change interest rate and currency policy now, but believes it is important to find out what options are available. – We must dare to think some new thoughts, and not least investigate. I don’t think we should jump to easy solutions. Therefore, we should have a professional basis and a crown commission. And I hope other parties can also be open to that. Published 06.08.2024, at 18.57
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Several politicians open up to save the weak krone – news Norway – Overview of news from various parts of the country
