The Norwegian krone is still struggling and has not been as weak as it is now since the corona spring in 2020. As a result, trips abroad become more expensive, and everything we import of goods costs more. This can contribute to even higher price growth – which in turn can lead to a further increase in interest rates. Norges Bank uses the key interest rate to keep price inflation down. If the interest rate is raised in December, it will be another blow to people and companies with large loans. It is expected that the central bank will announce an unchanged key rate of 4.25 per cent today. But there is great excitement about whether there will be any signals from the governor of the central bank about the December meeting. Storebrand manager Olav Chen now fears that the weak Norwegian krone will lead to even higher interest rates and problems for people. He therefore asks the politicians to take action and told Finansavisen at the weekend that more control of the krone is necessary to get price inflation under control. ADMINISTRATOR: Olav Chen in Storebrand. Photo: ISMAIL BURAK AKKAN / news Sitting quietly But among the financial politicians in the Storting, there is little willingness to take action to help the krone strengthen. news has asked the parties’ fiscal policy spokespersons in the Storting the following question: What can the politicians in the Storting do to strengthen the krone and get a more stable krone exchange rate? Do we now risk that the interest rate will have to be increased further, to counteract an even greater weakening of the krone? Should Norway do like Denmark, namely tie its currency to the euro? In summary, the answers point in the same direction: The politicians will not intervene directly to “help” the krone and point out that the setting of interest rates is Norges Bank’s responsibility. Finanstoppene also believes that overall, Norway is best served by a floating currency that is not “locked” to the euro. Won’t intervene Nevertheless, what the government and the Storting do is not entirely without importance, because the krone exchange rate is linked to the situation in the Norwegian economy, say the financial leaders at the Storting. Key words are safe financial management, predictability and sensible financial policy. SPOKESPERSON: Tina Bru from the Right. Photo: William Jobling / news – The most important thing that the Storting can contribute is predictability in economic policy, says Høyre’s Tina Bru. The Ap/Sp government’s budget party SV says it is unfortunate if the krone exchange rate fluctuates too much and that the currency is too unstable. – But as of today, I do not see that there is a basis for the Storting to intervene, says Kari Elisabeth Kaski. BUDGET PARTNER: SV’s Kari Elisabeth Kaski. Photo: Alf Simensen / Alf Simensen – I would like to warn against political decisions that will affect the krone exchange rate. But we follow the situation and believe that it is relevant in the discussion about the central bank’s mandate. This spring, the debate raged over whether the government’s tax increases for the business sector this year in themselves contributed to creating an impression of increased risk associated with investing in Norway – and in this sense the krone weakened. This has been repeatedly flatly rejected by the governing parties, but the FRP still points to this. – The government’s tax shock, with historically large tax and duty increases for business, has weakened confidence and contributed to increased political risk for investments in Norway, says Frps Hans Andreas Limi. Risking increased interest The weak krone is not only a disadvantage. For companies that produce in Norway but sell abroad, it can, on the contrary, appear as a short-term advantage. At the same time: After 13 interest rate hikes since autumn 2021, several of them double, many Norwegians with high loans have had significantly less to deal with. Although the krone exchange rate is not part of Norges Bank’s mandate in setting interest rates, the currency still affects the key interest rate. This is because a weak krone makes the goods Norway buys abroad more expensive, which can send price increases upwards. FINANCIAL POLICY: Sveinung Rotevatn from Venstre. Photo: ISMAIL BURAK AKKAN / news In this sense, we risk higher interest rates as a result of the weak krone exchange rate, explains Venstres Sveinung Rotevatn. – We do it indirectly. Norges Bank does not have the task of ensuring that the krone has a certain exchange rate. But a weak krone results in higher imported inflation, which in turn can lead to higher interest rates, which in turn normally results in a stronger krone, he says. Bru refers to Norges Bank when it comes to interest rate setting, but adds: PARTY LEADER: Rødts Marie Sneve Martinussen. Photo: Emilie Holtet / NTB – A weaker krone can increase inflation by increasing import prices. In that way, a weaker krone can lead to higher interest rates, she notes. But Rødt leader Marie Sneve Martinussen sees no reason why a weak krone should lead to further increased interest rates. She points out that interest rates are no longer rising in the eurozone. – This means that there are mechanisms other than interest rate differentials that cause the krone exchange rate to develop differently from the euro. No to a “Danish” solution Olav Chen in Storebrand has raised the possibility that Norway can do like Denmark, namely tying its own currency to the euro. The advantage is that it will be able to provide increased stability and less fluctuations in the krone exchange rate. Recently, fresh figures showed that Denmark has become the “European champion” in low price growth. But the financial politicians say no. – I think it is unwise, says Kaski – who wants freedom in monetary policy and the opportunity to set interest rates himself in Norway. – Neither the Storting nor Norges Bank controls or should control the exchange rate, and for Norway over time it is an advantage that it is floating, says the finance committee’s chairman Eigil Knutsen from Ap. FINANCIAL POLICY: How much money the Storting spends and what the money is used for has a bearing on the krone exchange rate. Photo: Ole Berg-Rusten / NTB – The fact that we have our own currency, which floats freely, means that it also acts as a shock absorber for the economy, says SPS Ole André Myhrvold. – The Danish economy is closely linked to Germany, which has the euro. Because of the oil industry, the Norwegian economy has often developed differently from Europe. Therefore, we are essentially best served by having an independent monetary policy, says Høyre’s Tina Bru. Should sit deep inside, says Venstre’s Sveinung Rotevatn. – If you are first going to give up pursuing an independent monetary policy, you might as well discuss full membership in the EU’s currency cooperation and adopt the euro, he says. In the past, the krone exchange rate was often closely linked to the price of oil: When the price of oil rose, the krone strengthened. But since the sharp drop in oil prices in 2014, it seems that this connection is weaker. MONEY VALUES: The krone weakens against the dollar and euro. Photo: Jon Olav Nesvold / NTB In the spring, the krone weakened sharply against the euro and dollar. It recovered somewhat in the summer, but this autumn the fall has increased again: ten years ago, 1 dollar cost around 6 kroner. Today the price is over NOK 11. And in 2014, 1 euro cost NOK 8 – now the price is almost NOK 12. – Norway needs our own krone, so that we can adapt the interest rate level to the Norwegian economy. That is one of the reasons why we have come through crises such as the financial crisis and corona better than many other EU countries, says Martinussen. – If we tie the krone to the euro, it will help with fluctuations in the Norwegian krone. But we will have given up the opportunities we have to manage Norwegian monetary policy based on developments in the Norwegian economy, says MDG’s Lan Marie Berg. – Do not control Storebrand manager Olav Chen is now requesting action from the Ministry of Finance to help households. He points out that a “tiny” disturbance in the stock market recently was enough to “knock the krone into the ground”. – This is something that should worry both the central bank and the authorities. If you don’t have the krone under control, you don’t have inflation under control either, he told Finansavisen. Chen has advocated that the Ministry of Finance should “speak up” the krone. He has also aired the idea that the ministry should define an interval where the krone should lie. And thus shown that, for example, Denmark has tied its currency to the euro. RATE MEETING: Central Bank Governor Ida Wolden Bache will make new statements on Thursday. Photo: Ole Berg-Rusten / NTB Norges Bank has announced another interest rate jump in December. In that case, the policy rate will reach 4.5 per cent. But such an interest rate increase may occur at the same time as a number of signs that the economy is slowing down: Rødt’s Marie Sneve Martinussen points to “good reasons” why there should not be any more interest rate increases now. – Higher interest rates now increase the chance that the finances of many households will be pushed over the edge, and that the Norwegian economy will have a crash landing with thousands more unemployed, she says.
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New brutal krone race – the politicians will not intervene – news Norway – Overview of news from various parts of the country
