Curious as to why the Norwegian Kroner is so weak

[vibration]

I am a British citizen happily retired and living in Thailand, I receive the bulk of my pension from Norway (about 20% from UK) and am curious as to why the Norwegian Kroner is so weak and has been continuously weakening for a very long time.

 

When I first moved to Thailand in 2004 I received approximately 6.4 THB for 1 NOK however now it is approx 3.1 and over the years we have lost millions because of this.

 

Fortunately I can stop or reduce my main Norwegian State pension for another 5 years to get it higher and this helps some what.

 

My understanding is that Norway is one of the richest countries in the world with vast oil and gas resources and is debt free.

 

Compared to some other Scandinavian countries the Danish Kroner is considerably stronger than the NOK and gives just over 5 THB for 1 DKK and Sweden is also stronger than the NOK giving approx 3.2 THB for 1 SEK.

 

I am just amazed as to how the NOK is so weak.

 

Many thanks in advance for any enlightenment.

[timendres]

No expert on the Kroner, but it looks like the same problem seen in other currencies - central banks and monetary policy.

 

https://corporate.nordea.com/article/80791/nok-update-nok-will-remain-weak-for-now

[Olav Seglem]

Guess also relative"small" economy.

But agree-its strange..

[Celsius]

4 hours ago, vibration said:

and is debt free

 

Here is your answer

[Sophon]

From https://www.nordea.com/en/news/why-has-the-nok-weakened-so-much

 

Quote

Over the past year, the NOK has lost about 20% versus both the USD and the EUR. Until last autumn, the weakening was most pronounced against the USD. Since then, the NOK has also weakened sharply versus the EUR. We believe that the main reason for the past year’s NOK weakening is the clearly narrower interest rate differential against our main trading partners. Over the past year, other central banks have hiked interest rates more aggressively than Norges Bank. The NOK has gone from a high-yield currency to a low-yield currency. 

The NOK performance against the EUR since the autumn is illustrative. Very high inflation and better eco-nomic development than feared have led to a rate spike in the Euro area that was almost unthinkable a year ago. Since July, the ECB has raised its policy rate from -0.5% to 3.25%. Despite the rate hikes, also from Norges Bank, the favourable yield differential for the NOK has eroded. While Norway’s key policy rate was about two percent-age points higher than in Europe, the gap is now close to zero (chart A).  When the relative return on NOK positions is reduced in this way, the NOK becomes a less attractive investment currency. Other currencies that have weakened almost as much as the NOK against the EUR include the AUD and CAD (chart B).

 

[balo]

Yes we are not in a good mood in Norway, you can blame our weak government and leadership over the years. 
The oil and gas industry is still big business, especially after the Russia-Ukraine war started

The Norwegian Krone is too much dependent on others.  The Norwegian Bank (NB) sell the revenues from the oil and gas sector in NOK and buy foreign currency in Euro and Dollars. Which basically means they are not defending the NOK, rather the opposite.  

Again I blame our weak leadership. In the populated areas like Oslo and Bergen people are struggling  to pay the bills, even with the high salaries and taxes.  The food queues are longer, also you have the immigrant crisis going on, with 30000 Ukrainian refugees on top of the other immigrants coming from African and Asian nations. 

The free health care system suffers a lot , yes it's almost free but you have to wait for months to get a surgery.  So if you do not have a private insurance you could risk ending up in a serious condition before you get any help. 

I am not retired yet , but I really hope the Krone gets stronger before I will be in the same situation as the OP. 
 


 

[itsari]

The Norwegian kroner continues to fall.

First half of 24 looked promising.

The last two months has wiped out any small gains.

 

[balo]

It's just political reasons, since Norway now earn more oil money than ever before thanks to the war.  Feels like they do it on purpose. 
Crazy times. 
  
 

[KhunBENQ]

On 9/14/2024 at 8:16 AM, itsari said:

The last two months has wiped out any small gains.

In that the NOK is not much different from other countries.
Baht gained a lot against USD, EUR, GPB ....

Have lost oversight on the misc threads about it (one from me ).

NOK is a bit worse with about -5.5% since July, USD -4% (rough numbers).

[sammieuk1]

The kevlar coated titanium carbon fiber Baht is impervious to any logical force especially if it sniffs a £ I found🤔

[itsari]

1 hour ago, sammieuk1 said:

The kevlar coated titanium carbon fiber Baht is impervious to any logical force especially if it sniffs a £ I found🤔

All foreigners feel the pain with a strengthening baht.

However the Thai business world is complaining about the bahts  strength affecting exports.

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