With the arrival of warmer days, most of us start planning summer holidays. However, our dreams of holidays abroad are sharply confronted with the reality of the Norwegian currency exchange rate. Unfortunately, the exchange rate of the currency in which we receive our payments has been low for a long time, and the prospects for improvement are not promising.
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The exchange rate of the Norwegian currency and its impact on holiday plans
Such a low rate makes it ours foreign trips will cost much more than we planned. This applies to everything from purchasing services such as car rentals, restaurant and hotel stays, to purchasing souvenirs. Regardless of whether we spend money on accommodation or shopping, each amount spent will unfortunately be higher.
Is there any solution that would allow us to avoid expensive holidays? You can consider last minute options or choosing less popular tourist destinations. Alternatively, spending your holiday in Norway may be an attractive option because you will avoid additional costs related to the unfavorable exchange rate.
A weak currency pleases exporters, but worries importers
Norwegian exchange rate or krone rate is of great importance for economic development. Norway is a small open economy.
Weak koruna exchange rate
A weak currency pleases exporters because their products become cheaper and more competitive on foreign markets. However, this worries importers, consumers of products imported from abroad, and companies and individuals indebted in foreign currencies. For them, a weak currency means an increase in import costs and a decline in purchasing power. Additionally, a falling currency may lead to an increase in inflation by raising the prices of imported goods and services.
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What do economists and experts say about this?
Currently, experts believe that before the krone strengthens, there must be reductions Stop interest rates in the USA and Europe.
While it is difficult to say why the krona exchange rate is exactly what it is today, or to predict the future development of the krona exchange rate, there are certain factors that economists believe influence the krona exchange rate in the short and long term.
Economic models have difficulty predicting future exchange rate movements, which is often referred to in the scientific literature as Meese and Rogoff puzzles . Therefore, today's exchange rate is often the best estimate of the future exchange rate - as we read on the website of Statistics Norway
However, there is one more issue: whose holidays may turn out to be the most expensive? This is a situation that, as it turns out, concerns many people in Norway - it is a matter of taking out loans for trips abroad.
However, even inflation, higher loan interest rates and a weak krona do not mean that people will give up their holidays abroad. But more people will want to spend their holidays in countries where they can make the most of their holiday budget. Research shows that five out of ten Norwegian residents will choose holidays abroad this year.
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Photo: screenshot wataha.no
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