(The online newspaper): At full speed into the Christmas month, we are extra concerned with our wallets, because now there will be plenty of temptations.
For those of you who are planning a city break in a euro country, it is good news that one euro now costs 11,57 kroner.
– It was not long ago that it was in the 12th century, says Sparebank 1 SR Bank’s chief economist, Kyrre M. Knudsen, to Nettavisen.
At the same time, we see the opposite effect for the dollar – a dollar costs 11,09 kroner.
The Trump effect
– The Trump effect is the simple answer to the dollar fluctuating like this. US President-elect Donald Trump has promised as much as we give extra gas to the US economy, that it will be attractive to sit on the dollar, explains the chief economist.
– Long-term interest rates in the US have risen a lot in recent months.
The euro has now fallen to its lowest level against the dollar since 2022 due to weak economic activity in Europe. Fresh figures on Friday show that both the industrial and service sectors are struggling.
Cheaper Swedish trade
– So what does this mean for us in Norway?
– That the krone strengthens against the euro and the Swedish krone is much more important than the Trump effect on the dollar, says Knudsen reassuringly.
While the interest rate in Europe may fall into the double digits with a double cut in December, expectations are completely different in the USA – where the key interest rate is expected to be 3.75, Knudsen explains.
– Unemployment in Europe has not been this low since 1981. Increased tariffs and unrest in the world cause weak growth, which makes it necessary to lower interest rates to stimulate the economy.
Read also: – Trump raises interest rates in the US
50-50 believe in cuts in January
– So what everyone is wondering: When will Central Bank Governor Ida Wolden Bache give us the first interest rate cut?
– Well – as it looks now, it is very interesting that the market is pricing in the probability of an interest rate cut in January 50–50. So a strong krone against the euro is good news for anyone with a loan.
Nevertheless – Knudsen is among those who believe we have to wait until March, as Norges Bank has signalled.
The Krone Chronicles: Christmas Spending and Currency Rates
Ah, the holiday season is upon us! A time for joy, festivity, and of course, that delightful sensation of watching your bank account dwindle faster than your patience in a long line at the post office. But hold onto your shopping bags—there’s some juicy news about the Norwegian krone that might just help you fill those stockings without emptying your wallet!
Christmas Shopping: A Matter of Currency
It appears that the krone is flexing its muscles this December, now boasting a value of 11.57 kroner per euro. Not too long ago, we were in the realms of the 12s! Sparebank 1 SR Bank’s chief economist, Kyrre M. Knudsen, appears to have found his Christmas spirit and is keen to echo it to all of us. If you’re planning a cheeky city break in the euro zone, now might be the right time to consider some festive frolics!
The Dollar Dilemma: What’s Going On?
But alas, while the euro may be within your grasp, the dollar is playing hard to get at 11.09 kroner. Thanks, Donald Trump! Yes, you guessed it: the man whose hair defies gravity seems to also dictate currency fluctuations. According to Knudsen, this is due to what he affectionately terms “The Trump effect.” It’s as if currencies have become the latest contestants on a reality show, flipping and flopping based on whatever wacky policy is tweeted out next.
What Does It All Mean for Us in Norway?
Now, let’s get to the nitty-gritty. With the krone standing strong against the euro, what does this mean for the good people of Norway? Simply put, it’s a blessing when you’re looking at loan repayments! If you’ve been sweating bullets over your new flat-screen TV (which you absolutely did NOT need), rest assured that the strong krone will cushion your financial woes.
The Interest Rate Tango: Will We Cut or Not?
The million-dollar question among Norwegians is: “When will Central Bank Governor Ida Wolden Bache chop those interest rates?” Currently, the market is on tenderhooks, pegging the chances for a cut in January at a nail-biting 50-50. This kind of indecision can drive anyone loopy—like debating whether to have the gingerbread house or a third helping of Lutefisk! But Knudsen suggests we might have to hold our horses until March for any substantial reductions. So, brace yourselves, folks!
The European Economic Rollercoaster
While all this is going on, Europe seems to be struggling like it’s in a Three Stooges sketch. Economic activity has dropped to a level reminiscent of your uncle’s dancing at family weddings. It’s no wonder the euro is stumbling, having fallen to its lowest level against the dollar since 2022. Is it too late to call the dance instructor?
In conclusion, while the currency market is about as predictable as a cat in a room full of laser pointers, the strengthening krone is currently good news for your budget. With Christmas just around the corner, take this knowledge and wield it wisely at the shops. Happy holidays and may your credit card bill be lighter than your aunt’s fruitcake!
For more on that Trump effect on interest rates, check out this enlightening piece… – Trump raises interest rates in the US
(The online newspaper): As we rush headlong into the festive month of December, many of us find ourselves particularly vigilant about our spending habits, especially with a myriad of enticing offers and luxuries beckoning just around the corner.
For those considering a getaway to a eurozone country, there’s some encouraging news: the current exchange rate has plummeted, leaving one euro valued at just 11.57 kroner.
– It wasn’t too long ago that the exchange rate was hovering around the 12 kroner mark, notes Kyrre M. Knudsen, chief economist at Sparebank 1 SR Bank, in an interview with Nettavisen.
Conversely, the situation is less favorable for those eyeing transactions in U.S. dollars, which are currently priced at 11.09 kroner.
The Trump effect
– The fluctuations we see in the dollar’s value can largely be attributed to the “Trump effect.” As U.S. President-elect Donald Trump pledges to supercharge the American economy, it has become increasingly attractive for investors to hold onto dollars, explains Knudsen.
In recent months, long-term interest rates in the United States have seen considerable increases.
The euro has plunged to its lowest value against the dollar since 2022, driven by sluggish economic activity across Europe. Recent reports reveal that both the industrial and service sectors within the region are facing significant challenges.
Cheaper Swedish trade
– So what does this mean for us in Norway?
– According to Knudsen, the stronger krone against both the euro and the Swedish krona is considerably more impactful than the fluctuations in the dollar due to the “Trump effect.”
While European interest rates may risk dropping into the single digits with a potential double cut in December, the outlook in the United States starkly contrasts; interest rates are projected to remain around 3.75 percent, Knudsen elaborates.
– Unemployment rates in Europe have not been this low since 1981, yet the looming threats of increased tariffs and global unrest are exerting pressure on growth, necessitating a reduction in interest rates to rejuvenate the economy.
50-50 believe in cuts in January
– So what everyone is wondering: When will Central Bank Governor Ida Wolden Bache give us the first interest rate cut?
– Current market assessments indicate a striking 50–50 probability of an interest rate cut in January. A robust krone against the euro can only be seen as positive news for borrowers, says Knudsen.
However, Knudsen, among others, expresses skepticism, suggesting that a wait until March may be more realistic, as indicated by Norges Bank’s previous communications.
How does the recent rise in long-term interest rates in the United States affect investors’ decisions regarding holding onto dollars?
Or investors to hold onto dollars, explains Knudsen. This has led to a significant rise in long-term interest rates in the United States over recent months.
The weaker economic performance in Europe is further exacerbating the situation, as recent data reveals that both industrial and service sectors are facing challenges, causing the euro to tumble to its lowest value against the dollar since 2022.
The Strengthening Krone: A Blessing for Norwegian Consumers
– But what does this mean for us in Norway?
– The krone’s strengthening against the euro is far more significant than the fluctuations of the dollar caused by the Trump effect. This situation is beneficial for Norwegian consumers, particularly for those with loans, as the stronger krone eases the burden of currency conversion, allowing for better purchasing power in the eurozone.
With expectations of a potential cut in European interest rates, which may even approach double digits by December, this contrasts sharply with the U.S. outlook, where a key interest rate of around 3.75% is anticipated. Amidst the tumultuous economic landscape, Knudsen reassures that employment in Europe remains at its lowest since 1981—a testament to the complex dynamics at play in both regions.
As anticipated, many are speculating about when Central Bank Governor Ida Wolden Bache might announce the first interest rate cut for Norway. A recent survey indicates that the market estimates a 50-50 chance for a rate cut come January. However, Knudsen leans towards the belief that significant action may be delayed until March, aligning with signals from Norges Bank.
The Economic Landscape: A Mixed Bag
The erratic waves of the currency market can serve as a barometer for economic health, and while the Norwegian krone struts its stuff against the euro, the European economy appears to be struggling. As stagnant growth and global unrest provoke discussions about increasing tariffs, many are looking anxiously at these fluctuating economic indicators.
while the market may be more volatile than ever, the current strengthening of the krone offers a glimmer of optimism for budget-conscious shoppers during this holiday season. So, as you gear up to partake in the festive festivities, keep an eye on these financial tides—who knows when a strong krone could sway your shopping spree in the right direction? Happy holiday shopping!