. NOK exchange rate
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The Norwegian Krone hit its all-time low on Thursday morning. "The effect is more or less the same as if we had adopted a large nationwide collective wage cut," says Espen Henriksen of BI Norwegian Business School.
From the New Year Norwegian crown dropped significantly, and on Thursday morning it reached a historic low.
– Within the last month Norwegian crown weakened by more than 20 percent. Both against the euro and the dollar, when it comes to the zloty, it is 1 NOK = 0,36 PLN. What will happen in the future? We must admit that we do not know, says Espen Henriksen from the Department of Finance at BI Norwegian Business School, TV 2.
It is on 03.04.2021/0,457/XNUMX Norwegian krone exchange rate. The NOK exchange rate was PLN XNUMX
- How will it affect the Norwegian economy?
- The first thing to understand is that the sharp decline in the value of the krone is just like we are all going to impoverish dramatically. Most of us buy both Norwegian and foreign goods and services. Now foreign goods and services have become much more expensive. A marked depreciation of the currency has the same effect as if we had made a large national reduction in collective wages, explains Henriksen.
He adds that with the decline labor costs for export-focused enterprises, it may favor investment and employment in this sector in the long run.
NOK-Perspektywy course
Business Minister Iselin Nybø emphasizes that the government is working on targeted measures for companies in financial difficulties.
- Different industries are affected in different ways and at different times.
He says the government is doing everything to help the Norwegian business community.
- We want our Norwegian companies to go through this crisis.
A weakened crown may have tangible consequences for the consumer economy in the near future.
- When the krone loses purchasing power, it becomes more expensive to buy goods from abroad. So prices will now go up, says Sparebank1's consumer economist Magne Gundersen.
He takes the car industry as an example.
- We do not have an automotive industry in Norway, so this industry will become much more expensive. This applies to all imported goods.
A bleak future
According to Espen Henriksen, no matter how good the authorities' intentions are, it is extremely difficult to control the exchange rate of the krone.
- In the 70s, 80s and early 90s, central banks made many attempts to control exchange rates. In retrospect, these attempts were largely unsuccessful. The exchange rate system today follows from these lessons, among other things. While the Danes are pretty good at dealing with their currency, there are roughly two alternatives. Or to give up your own currency and join the euro area. Or let the crown rise as we have to rise in this situation.
Henriksen says that it is not possible to give an exact answer to the question of whether the current situation will also have consequences for the Norwegian economy in the future.
Norwegian Krone Exchange Rate - Historic Fall in Value.
- Taking into account the reactions we observe in the financial markets. Many fear that the crisis will not only affect value creation in the coming months. It may also reduce the level of value creation and prosperity in the years to come. In that case, we will be much poorer than we were a few days ago.
