Norwegian krone increasingly cheap
Visitors to Norway benefit from the decline
M. Michael Brady
If you plan travel to Norway, now may be the time; you will cut the cost of your stay there, as the ongoing trend of the exchange rate is toward more Norwegian kroner for a dollar. If you had exchanged last autumn, say on September 1, 2014, you would have paid 16.3 cents for each Norwegian krone, while in mid January 2015, a Norwegian krone costs around 13 cents.
The exchange rate between currencies depends on many financial factors. In international banking lingo, the Norwegian krone is said to be increasingly weak, while the U.S. dollar remains strong. The weakness of the krone is due to a decline in oil prices that in turn has curtailed investment in oil-related industries that has slowed growth and weakened the currency.
In Norway, the exchange rate is set by Norges Bank, which like the Federal Reserve System in the U.S., is the governmental institution that manages currency and money supply and sets interest and exchange rates. Commercial banks that offer foreign exchange to the public base their rates on the Norges Bank rate, but have additional margins for buying and selling transactions. The Norges Bank rate is a guideline median rate between buying and selling.
In the U.S., commercial banks offering foreign exchange to the public set their exchange rates in similar ways, based on the Federal Reserve System rates. The banking practices of OECD countries (including Norway and the U.S.) are similar. Yet there may be differences in exchange rates between any two countries on any given day. So it may be worthwhile to compare rates if you intend to carry cash. That said, when in Norway, if you debit an American bank card for charges in a shop or kroner withdrawal from an ATM or in a Post Office, the exchange rate will be the prevailing Norwegian one.
As shown in the graph, the exchange rate varies over time. The graph indicates the number of Norwegian kroner equivalent to a U.S. dollar. In 1960, a dollar was equivalent to 7.13 kroner, so each krone was worth 14 cents. Twenty years later, in 1980, the dollar was equivalent to 4.93 kroner, so each krone was worth about 20 cents. In early January 2015, a dollar is equivalent to about 7.8 kroner, so each krone is worth about 13 cents.
For Norwegian exchange rates, visit the Norges Bank website’s pages in English at www.norges-bank.no/en/; click on the USD hyperlink under the EXCHANGE RATES heading to bring up the current and past rates.
This article originally appeared in the Jan. 23, 2014, issue of the Norwegian American Weekly. To subscribe, visit SUBSCRIBE or call us at (800) 305-0271.