Norwegian Krone Collapses

Amid Coronavirus Crisis

 Posted by David Nikel — March 19, 2020 in News from Norway129

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

1
records fall in many currency pairs. The biggest headline
grabber in Norway was the USD-NOK.

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.

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
2
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!

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.

3
 “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.
4
 “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.

https://www.lifeinnorway.net/norwegian-krone-collapses-
amid-coronavirus-crisis/