Norwegian Krone Hits Eight-Month Low Against Euro Amid Falling Oil Prices
Key Points
- Norwegian krone weakens sharply against the Euro due to falling global oil prices and Norwegian economic uncertainty.
- Market impact: Investors are favoring safer currencies like the Euro, while Norway’s currency is pressured by lower export revenues.
- Technical analysis suggests more downside for NOK/Euro if oil prices continue to slump and Norway’s central bank signals dovish stance.
Over the past week, the Norwegian krone (NOK) has dropped significantly, hitting its lowest level in eight months against the Euro (EUR). A major reason behind this decline is the continued fall in oil prices. Norway is a major exporter of oil, and its economy heavily depends on high oil revenues. When global oil prices drop, the value of the krone usually weakens too. According to data from Investing.com and the latest updates from Bloomberg and Reuters, Brent crude oil prices have recently fallen below $81 per barrel, their lowest level since early January. This has hurt Norway’s projected income and investor confidence in the Norwegian economy.
The weakening of the krone is also a signal for broader market concerns. With geopolitical instability and talks of slower global growth, investors have been flocking to more stable assets like the Euro and U.S. dollar. Meanwhile, the Norwegian central bank (Norges Bank) is indicating that they might not raise interest rates further, while the European Central Bank is expected to stay cautious but stable. This policy divergence makes the krone less attractive to investors. In fact, Norway’s manufacturing PMI (Purchasing Managers’ Index) recently declined further below the 50 mark, signaling ongoing contraction in industrial activity. All these signs contribute to the krone losing strength.
From a technical perspective, the EUR/NOK currency pair has climbed steadily above the 11.70 level—its highest since October 2023. Key resistance is now seen at around 11.80, with no strong support levels until around 11.50. If oil prices continue to weaken and there’s no shift in Norway’s central bank policy, analysts warn that the krone may continue to fall. As of the latest market update, EUR/NOK is trading near 11.74 at market close on June 5, 2024. Brent crude is priced at approximately $80.72 per barrel, further highlighting headwinds for oil-export-dependent currencies like NOK.
Hot Take
If you’re holding or thinking about investing in currencies like the Norwegian krone, it’s crucial to understand how deeply tied they are to commodities like oil. A drop in oil prices doesn’t just hit energy stocks—it also affects whole national economies. Be alert to global energy market shifts and watch central bank statements closely. And for everyday people, this means traveling to Norway just got a bit cheaper… but Norwegians might find European vacations more expensive.
