The Norwegian krone is losing value again. Pressure on Norges Bank is rising
The Norwegian krone has weakened again after gains at the beginning of 2026. This increases the pressure for another interest rate hike. A decision could be made as early as the August meeting of Norges Bank's authorities.
A lower Norwegian krone exchange rate is particularly troublesome for people spending money abroad.
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The dollar rose from 9.15 NOK in May 2026 to around 9.8 NOK at the beginning of July. The euro currently costs 11.24 NOK, while in May it was at 10.70 NOK. However, the NOK remains stronger than at the start of the year, when the dollar cost 10.07 NOK and the euro 11.84 NOK.
Lars Mouland from Nordkinn Asset Management told E24 that this is a problem for Norges Bank. According to him, the central bank needed a stronger Norwegian krone to bring inflation down towards the 2 percent target more quickly. The market picture is now different than it was in May.
Lars Mouland from Nordkinn Asset Management told E24 that this is a problem for Norges Bank. According to him, the central bank needed a stronger Norwegian krone to bring inflation down towards the 2 percent target more quickly. The market picture is now different than it was in May.
The Norwegian krone weakens. The topic of interest rate hikes returns
Mouland believes that Norges Bank cannot stop at the current level. The central bank raised the reference rate to 4.25 percent in May 2026. In June, it left it unchanged but signaled a possible hike at one of the upcoming meetings. The next meeting will take place on August 13.
The reason is persistently high inflation. In recent years, it has remained close to 3 percent, which is above the central bank's target. Mouland assesses that without a stronger NOK, reducing price pressure will be more difficult. According to him, Norges Bank needs to raise interest rates even further.
The reason is persistently high inflation. In recent years, it has remained close to 3 percent, which is above the central bank's target. Mouland assesses that without a stronger NOK, reducing price pressure will be more difficult. According to him, Norges Bank needs to raise interest rates even further.
The Norwegian krone exchange rate may be influenced by the inflation reading, which SSB will announce on July 10.Photo: stock.adobe.com/standardowa
Risk is rising. August will be decisive
Mouland also points to the actions of oil companies. According to him, they are limiting the exchange of foreign currencies for Norwegian krone in connection with tax payments. This is related to the decline in oil prices. An additional factor is a possible rate hike in the US by the Federal Reserve (Fed).
According to the expert, Norges Bank may raise rates at least two more times. In an extreme scenario, the reference rate could exceed 5 percent. Frank Jullum, chief economist at Danske Bank, told E24 that the weakening of the Norwegian krone increases the likelihood of a hike in August. Marius Gonsholt Hov from Handelsbanken, on the other hand, points out that the NOK is now about 3 percent weaker than Norges Bank's latest forecasts assumed.
According to the expert, Norges Bank may raise rates at least two more times. In an extreme scenario, the reference rate could exceed 5 percent. Frank Jullum, chief economist at Danske Bank, told E24 that the weakening of the Norwegian krone increases the likelihood of a hike in August. Marius Gonsholt Hov from Handelsbanken, on the other hand, points out that the NOK is now about 3 percent weaker than Norges Bank's latest forecasts assumed.
Olav Chen from Storebrand Asset Management draws attention to the market's reaction. In his opinion, a signal that the rate hike cycle is over could prompt investors to price in future rate cuts. This could once again drag the Norwegian krone exchange rate down.
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