Norwegians in Sweden are determined to be poorer as the oil driven Norwegian currency is forced to fall to spur competitions
Friday, 23 August 2013
The Norwegian currency the krone (we write Nkr) has been forced to drop
in its value recently and is at its lowest level against the Swedish
krona (Skr) in nine years. Businesses however believe that the border
trade on the Norwegian Swedish boarder will continues to flourish.
Norwegians would have to manage to pay Nkr 91 for Skr100, a significant giant by the Swedish currency.
A weaker or slowdown in the Norwegian non oil economy is said to have
been the major driver for this phenomenon, but weakening the currency
and thus bringing down the exchange rate is also a deliberate strategy
by the country’s central bank which wish to strengthen competitiveness
and push the non oil sectors.
Swedish companies operating at the border with Norway are thus worried
that the strengthening Swedish krona over the Norwegian will bite into
their revenue and their profits. But some people are still not worried
about that given that price levels in Norway are two times the Swedish
prices.
“If you can pay Nkr90 or Nkr95 for a Skr100, it matters less when many
goods cost half what they do in Norway, “says Ståle Lövenheim, director
of Norby shopping in Svinesund which lies on the border with Norway.
A greater threat to businesses operating in the border trading area
however, is competition. It happens when more and more shopping centres
are opened that they take customers from each other.
Analysts feel that the volume will continue to grow, but that operating profitability might get a little bit tougher.
In February 2009, Norwegians paid just over Nkr75 for a Skr100.
That did not last long, for the value continued to fluctuate around a
much higher level than at present.
Another effect of the weaker Norwegian krone is that Swedes working in
Norway will see their take home money – that what they bring back to
Sweden shrink in Swedish kronor. It remains to be seen, however, if
this could be a deciding factor in making people to want to go over in
Norway to take a job.
Exchange rates don’t seem to be a driver for Swedish people wanting to
go to Norway to work given that people want to work and earn money for
their own survival, career development, save for the future and live a
better life. There are no jobs in Sweden and Norwegian pay are
just too high such that many more Norwegian Krona would offset any lag
the exchange rate difference had created.
Tord Strannefors, forecast manager at the Swedish Employment Service,
do not think the fall in the value of the Norwegian Krona will lead
someone to decided not to travel to Norway to seek work juts because of
the currency.
“The real winners on the divide between Sweden and Norway though are
those who commute from Swedish t work in Norway and live on Norwegian
price level wages. I believe the currency has a marginal impact on
them, “he said.
Norway has grown to be dependence on oil and this has been something
that has threatened to destroy its economy, which was being forced to
tip over. Realising this the central bank decided to start lowering
weakening the power of the currency.
Carl Hammer, head of FX research at SEB best sum it up this way
“Norway has become an extremely oil-dependent nation, with high wage
growth, driven by the oil sector and the public sector. Together with
the strong Norwegian Krona has led the non-oil sector in danger of
disappearing. Norges Bank has adjusted the monetary policy by
signalling clearly of low interest rates for a long time.”
Even from political direction, there are concerns for competitiveness and want to see weaker exchange rates.
by Scancomark.com Team
