Our neighbors in the east cut rent for the third time on Wednesday. Things are worse in the Swedish economy than in the Norwegian one, and now the Riksbank hopes to speed up the economy again. Riksbank Governor Erik Thedéen announces further cuts, and does not rule out that they will strike with a so-called double interest rate cut of 0.5 percentage points later this autumn. The key interest rate in Sweden is now 3.25 per cent. In the eurozone it is 3.5 per cent, while in Norway it still stands at 4.5 per cent. Policy rate in percent The policy rate is set eight times a year by Norges Bank. The policy interest rate governs the interest rates in the banks, and affects your housing costs. The aim of raising the interest rate is for the high prices to come down again. The forecast tells us how Norges Bank thinks interest rates will develop in the future. Read more about sources and reservations here. A higher policy rate means increased expenses if you have a mortgage 2022 2023 2024 2025 2026 2027 Prognosis Norges bank – Does not have a good answer In principle, this interest rate difference should mean that the Norwegian krone should strengthen – because a currency speculator will get more for his money in Norway, and thus having an incentive to buy Norwegian kroner. But the opposite has happened – the Norwegian krone has weakened against the Swedish krone. Why that? – I don’t have a good answer, says Ole Håkon Eek-Nielsen, currency analyst at Nordea. – I suspect that some may think that when you now cut in Sweden, it will provide a rather strong stimulus, which means that things will gradually improve in the Swedish economy. But both Eek-Nielsen and Nils Kristian Knudsen point to the price of oil to come up with an explanation for the devaluation of the krone we are now seeing. Check what it costs Select a currency: From Danish kroner to Norwegian kroner 158.06 Exchange rates from Norges Bank. Latest rate from 26/09/2024 Oil price drop A barrel of North Sea oil (burnt spot) will be 70.4 dollars on Wednesday afternoon. That’s more than $3 less than yesterday. There are two specific pieces of news that lie behind the fall in oil prices, both of which will probably send more oil into the market: Libya: There has been a big disagreement between the various factions in the country about who should be governor of the central bank. Those concerned also have power over oil prices in the country. In protest, it has led to a halt in oil production, which has been around one million barrels per day. Now, according to Bloomberg, the parties must agree – and more oil will probably soon enter the market. Saudi Arabia: The country, which is at the head of the Opec+ oil cartel, has long chosen a strategy where it wants to keep the oil price at around 90-100 dollars a barrel – and has adjusted its oil production accordingly. But now the Financial Times writes that Saudi Arabia is about to move away from this price strategy, and will therefore extract more oil than before. Historically, the price of oil and the krona have been closely linked. And even though they have become more loose in recent years, they still have something to do with each other. Nils Kristian Knudsen is a currency strategist at Handelsbanken. Photo: Handelsbanken / Press image – If it now turns out that Saudi Arabia thinks differently about the oil price, then it will lead to a lot of uncertainty. This leads to those who have invested in the Norwegian krone becoming more uncertain about the future. So this is an element that sometimes affects the Norwegian krone, says Knudsen. Have to look at why the others are cutting – Does it no longer mean anything special for the krone exchange rate that our trading partners Sweden, the EU and the USA are cutting interest rates? – Yes, it still means something, says Knudsen. FULL SPEED: The governor of the central bank in Sweden, Erik Thedéen, signaled on Wednesday that he will lower interest rates faster than previously communicated. “It will contribute to a stronger economy, and inflation close to the target”, he wrote in a press release. Photo: CLAUDIO BRESCIANI / AFP But Knudsen says we also have to think about why our trading partners are cutting interest rates. – There are big changes afoot now. We have gone from a fear of high price growth and high interest rates to now having a greater fear of recession. That put the currency market a little more on hold. And it is precisely this general uncertainty out there that causes trouble for the krona. Knudsen points out that the Riksbank, by opening up for a double interest rate cut in Sweden during the autumn, also indicates an uncertainty linked to the development of the Swedish economy. – This put the rise in the krone in Norway on hold, and we simply have to be a little more patient, says Knudsen. The price of the euro over the past 25 years: The price of the euro over the past 25 years. The graph has a peak in 2008 during the financial crisis, in 2020 during the pandemic and is now again at a high level.20002004200820122016202020246 NOK8 NOK10 NOK12 NOKFinancial crisis →Pandemic →The price of the euro in the last 25 years. The graph has a peak in 2008 during the financial crisis, in 2020 during the pandemic and is now at a high level again.20002004200820122016202020246 NOK8 NOK10 NOK12 NOKFinancial crisis →Pandemic →The graph shows exchange rates from Norges Bank. Last course from 26/09/2024. Published 26/09/2024, at 17.08
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Sweden cuts interest rates – yet the Norwegian krone weakens against the Swedish – news Norway – Overview of news from different parts of the country
