During the trading day, the euro has become 0.70 per cent cheaper against the krone, while the dollar has become 0.63 cheaper. – This is very good news for the krone exchange rate, says Dane Cekov in Nordea Markets. When the announcement came on Friday morning, the immediate reaction was that the euro went from NOK 11.29 to NOK 11.19 and the dollar from NOK 10.20 to NOK 10.15. – A good cocktail The reason for the strengthening of the krone is that sales of Norwegian kroner will be significantly lower in January compared to the previous months. Norges Bank has sold 1.4 billion every day. In January, sales will drop to 350 million a day. In other words, the wholesale sale of kroner will partially cease, which affects supply and demand for kroner in the financial market. That is why Norges Bank trades kroner Norges Bank does not sell kroner to influence the exchange rate, as other central banks can do, but because the state has given the central bank a very special task. Norges Bank helps the state to obtain kroner that can be used to pay public expenditure. The income in the state budget is less than the expenditure, and the politicians cover the deficit with oil money. The state already has a number of kroner that comes from taxes and dividends from the oil and gas sector. But the sum is usually less than the oil money the politicians want to spend. Therefore, Norges Bank has as a rule bought kroner every day to cover the use of oil money. But in the last couple of years, Norges AS has received more kroner from the oil and gas industry than the deficit in the national budget. Therefore, Norges Bank sells the surplus of kroner regularly throughout the year. After the Ukraine war broke out, oil and gas revenues skyrocketed. At most, Norges Bank sold NOK 4.3 billion every day in October 2022. The aim is for fluctuations in oil revenues to have a neutral effect on the krone exchange rate. The krone trade is carried out on an ongoing basis, with the timing of the sale taking place in relation to the tax input in krone can affect price movements. Dane believes that the combination of lower krone sales and the latest interest rate increase, at the same time that interest rates will probably be lowered in the US, is good news for the krone exchange rate. – It is a good cocktail that will make it more attractive to own kroner. Cekov believes that today’s news could be a “game changer” that could lead to more funds abroad investing in the Norwegian krone, because they believe that it will rise in value. – A significant fall in the value of the Norwegian krone is also good news from a psychological perspective, as a number of foreign players have been negative due to increased krone sales from Norges Bank. Dane Cekov in Nordea Markets says that the Norwegian krone is off to a good start to the year. Photo: Benjamin Danielsen / news Getting the year off to a good start 2024 will be a much better year for the Norwegian krone than 2023, Cekov believes. – I think we can see the euro go below NOK 11 in the coming weeks. This is a significant strengthening compared to a month ago, when the euro was around NOK 12. The krona will also strengthen against the Swedish krona, the economist believes. – Things are going much better in the Norwegian economy than in Sweden, and with the low krone sales, it will go that way. – I think that when people return to work on 2 January, the krone exchange rate will continue to do well.
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– Very good news for the krone exchange rate – news Norway – Overview of news from different parts of the country
