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Norwegian Krone Collapses Amid Coronavirus Crisis

Norwegian krone currency market fall

The Norwegian krone has suffered its biggest single day collapse against the US Dollar in modern times.

Many foreigners living in Norway are even followers of the currency markets. It's in our interests if we still have financial holdings back “home.” Anyone who has savings or business income/expenses in major foreign currencies needs to pay attention.

The currency markets have been chaotic ever since the coronavirus took hold in Europe, but Wednesday saw records fall in many currency pairs. The biggest headline grabber in Norway was the USD-NOK.

Read more: How to Transfer Money Internationally

Astonishing fall against the US Dollar

Experts described the historic krone collapse as a “fire sale” as it recorded the biggest single day fall in modern times. The Norwegian krone was already at record low against the US Dollar when the currency market hit the panic button on Wednesday.

While Norway has implemented emergency coronavirus measures to control the spread of the virus, the currency chaos was caused by the tumbling oil price, global markets and general uncertainty.

Norwegian krone tax rebate

On 1 January, 2020, 1 US Dollar bought 8.71 kroner. On the morning of Wednesday 18 March, 1 US Dollar bought around 10.48 kroner. But by 4am on Thursday 19 March, the Dollar stood at 11.90 kroner. Extreme barely describes the movements.

This means that someone buying 10,000 US Dollars would today need approximately 119,000 kroner. Just eleven weeks ago, that very same transaction would have cost 87,100 kroner. In fact, just 24 hours ago, it would have cost 104,800 kroner!

Read more: Save on bank transfer fees between Norway and USA

The USD-NOK rate on Wednesday is the biggest weakening in a single day since Norges Bank left the fixed exchange rate regime in 1992. The previous biggest fall was back in December 2016, but then the rate plunged 60 cents. Seen as extreme now, it doesn't come close to what happened yesterday.

Markets in meltdown

The oil price fell to new lows at USD $25 per barrel, while the American stock exchanges continued their downward trajectory.

Norwegian krone coins

“The financial markets are about to melt down. The markets almost don't work,” says Magne Østnor, currency strategist at DNB Markets to E24. It isn't just the US Dollar market where the krone is struggling.

At the time of writing one Euro costs 12.91 krone, the most expensive figure ever. The British pound swung to more than 13 kroner for the first time in almost five years, standing at the time of writing at 1 GBP = 13.69 NOK. “The movements in the krone are extremely brutal – from already extreme levels,” adds Østnor.

“Worse than the financial crisis”

Østnor said there are many in the financial industry who are saying that this is worse during the financial crisis that began in 2008. However, we do not yet know the duration of this, and that's the most important thing for long-term economic effects.

“If we see that we are able to limit the spread of infection and resume activity, the financial markets will eventually come back. Then we might ride off the storm without it being more than a setback. The longer this lasts, the greater the risk of a deeper and longer-lasting setback in the real economy than during the financial crisis,” he explains.

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About the Author: David Nikel

Originally from the UK, David now lives in Trondheim and was the original founder of Life in Norway back in 2011. He now works as a professional writer on all things Scandinavia.

13 Comments

  1. Thanks for the write up.What does it mean for daily life here in Norway? Any ideas on cost of living and savings?

  2. Norwegian bank’s front page:

    The central bank of Norway’s aim is price stability and financial stability, and to generate added value through investment management

    ..It seems that NOK is worst currency on planet earth. Is the bank doing anything or is this the currency doomed and every one should avoid it as much as they can. This is epic failure of the bank and hard to see it to be trusted currency again, at least not any day soon.

  3. It is disaster for Norwegian economy, there will be extreme inflation as everything is imported. If Norwegian central bank will not do anything it can be even worst. It is a pity that NOK is so addicted from oil price. When oil price will/if go back to normal than NOK also gonna be on good level

    1. @Pit Following NOK the past 10 years to me it more seems like that NOK only follows oil prices downwards, but not upwards. NOK already lost 20+ % of its value in the last 5 years, even before this current mega-fall.
      I really hope they will manage to do something to make it recover; and fast.

  4. Its time for the central bank in Norway to sell dollars from its strategic reserves and arrest the free slide of NOK.

    1. But the investments of the Norwegian fund is mostly abroad and in USD. So when the USD goes up (against the NOK) it means that the fund has more NOK and not less.

      1. Which means nothing good for workers . Only the export and the government are the ones who see the benefits.
        Thing is they don’t care about foreign workers . More money stays in Norway , with worse Nok.

        Here is the real reason why NOK is low

        DN noted that Norway’s Oil Fund was worth a dizzying NOK 10,088 billion at New Year. On Thursday morning, it was worth NOK 10,500 billion even after the recent international stock market dives. Its stock market portfolio, which accounts for 70 percent of the fund’s assets, was down but the bond and financial portion of the fund has increased while both the dollar, euro and other major currencies have risen against the krone. “When the krone falls, shares and commercial paper in dollars and euros are worth more in kroner,” DN noted.

        Measured in strictly dollars, the value of the Oil Fund has fallen around 24 percent this year. Measured in krone, it gives Norwegian politicians more room to act as they try to bolster businesses and household income that’s suddenly disappeared with this week’s massive layoffs. The government is allowed to spend 3 percent of the kroner value of the Oil Fund every year. Right now, that amounts to well over NOK 300 billion. ”

        So actually norway lost 24 percent of the wealth in this corona crisis , which would mean 24% less of that 3% in the budget, but smart people governing Norways finance are playing dumb and “woried” with low NOK, when instead they want it even worse as value of fond is 500 bilion of NOK more than it was before crisis.
        Which means they can pull more money trough this 3% which means then they can buy votes , have export growing along with companies which are generally all Norwegian owned and workers are mostly import so screw them and their selling nok for other currencies = just win win for Norge

  5. For some this will actually be a plus (I have a GoFundMe fundraiser in the US, for example). And it might lure tourists here when the virus crisis passes if the rate is still down. Not that I wouldn’t prefer general stability.

  6. This is the Norwegian government that’s coursing this because they only thing about the export of oil but in Norway the imports are greater than the exports, this is the Norwegian government policy. The government gets richer while the citizens are getting poorer, that’s why you se people travelling to Sweden for shopping of food. And they think they’re the one of the richest countries in the world but that’s a lie.

  7. Sev Jensens just got out at the right time what did she know? She just could have been lucky but watch her and her party at the next election.

    1. This is the beginning of the ushering in of the one world government/new world order. Read up on Bible prophecy and seek Jesus with your whole heart while you still can. All will suffer in the end, but the wealthiest countries will be hit hardest on the front end because they have to get us to a point of desperation so that we will hand over our national and cultural sovereignty.

      1. The bible was written by a few old men years after the event, I wouldn’t put much store in what it says if I were you. Jesus said ‘The kingdom of Heaven is within’. Raise your consciousness level. We will all be fine.

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