Norway Enters The Currency Wars

Tyler Durden's picture

While the G-20 and the G-7 haggle among each other, all (with perhaps the exception of France) desperate to make it seem that Japan's recent currency manipulation is not really manipulation, and that the plunge in the Yen was an indirect, "unexpected" consequence of BOJ monetary policy (when in reality as Richard Koo explained it is merely a ploy to avoid the spotlight falling on each and every other G-7/20 member, all of which are engaged in the same type of currency wars which eventually will all morph into trade wars), Europe's energy powerhouse Norway quietly entered into the war. From Bloomberg: "Norges Bank is ready to cut interest rates further to counter krone gains that interfere with the inflation target, Governor Oeystein Olsen said. “If it gets too strong over time, leading to inflation that’s too low, we will act,” Olsen said yesterday in an interview at his office in Oslo.

The problem for Norway is that on one hand it, too, seeks to boost its export-business in an imitation of the beggar-thy-neighbor policies adopted by every other government, or artificial monetary union, with a printing press, while on the other, its property market which is overheating due to Norway's perceived status as one of Europe's safest money parking locations (alongside Switzerland) will merely heat up even more should the Norges Bank cut rates as it appears set to do, in order to preserve its front in the global currency war.

Olsen and his colleagues are torn between protecting exporters through lower rates that stem krone gains, and a policy that addresses an overheated property market. Western Europe’s largest oil exporter, which boasts the biggest budget surplus of any AAA rated nation, has emerged as a haven from the euro area’s debt crisis.


The krone sank as much as 0.6 percent against the euro following Olsen’s comments. Versus the dollar, it dropped as much as 1.4 percent. The krone was little changed at 7.3939 per euro as 11:57 a.m. today.


“A pronounced weakening of growth prospects, or a krone that is too strong, may over time lead to inflation that’s too low,” Olsen also said in the text of his annual speech held yesterday in Oslo. “Such development would be counteracted by monetary policy measures.”

Some will see in Norway's actions the germ of the same ruinous policies enacted by Ben Bernanke:

Low interest rates and falling unemployment have boosted private borrowing, with household debt estimated to swell to more than 200 percent of disposable incomes this year, according to the central bank. House prices, which rose an annual 8.5 percent last month, have surged almost 30 percent since 2008, almost doubling in the past decade. “Household debt and house prices are still moving up,” Olsen said. “These are the key reasons why the key policy rate hasn’t been lowered further.”


The dilemma has spurred debate on the extent to which monetary policy should target asset bubbles, or whether rates are too blunt a tool. The central bank will start advising the Finance Ministry on how much extra capital banks need to hold in their counter-cyclical buffers next month. That follows a proposal to triple minimum risk weights on banks’ mortgage assets to 35 percent and a separate recommendation to limit the use of covered bonds to finance mortgages.


Although growth in our part of the world is weak and real interest rates are low, many banks are still operating with high return targets, which could lead to excessive short-term risk taking,” Olsen said. “Banks and their owners should accept that return on equity will be lower, but also safer in the years ahead.”

Yet while hurting domestic home buyers, a weak FX policy will certainly help home sellers and everyone else looking to flip assets for a quick gain - a process that has taken the entire developed world by storm once more - and will most certainly aid exporting mega corps such as Norsk Hydro.

Companies such as Norsk Hydro ASA, Europe’s third-largest aluminum maker, have struggled to adjust to a stronger krone, which is pushing up export prices even as demand from Europe declines. The krone reached a record on a trade-weighted basis yesterday. Demand has left the currency 41 percent overvalued versus the dollar this year, topping 12 major currencies, according to calculations from the Organization for Economic Cooperation and Development.


Olsen also said yesterday the bank has no plans to talk the currency “up or down” and no “specific” level for what too strong means.

We may have heard that one before.

“It’s appropriate to use a few years to bring up inflation,” Olsen said. “Prices for Norwegian goods have increased considerably more than consumer prices, reflecting the improvement in Norway’s terms of trade. Incomes, output and employment are rising at a solid pace.”

Few years? Hasn't Mr Olsen heard that in Japan Abe plans on talking up the USDJPY by some 20% in a matter of months, and at last check economy minister Amari had a 13,000 Nikkei target by the end of March. Surely if a central bank does not stick to such a ridiculous hourly schedule it will lose all credibility. Or something.

As for Norway, its formal entry into the global FX war will likely take place next month:

The bank left its benchmark interest rate at 1.5 percent for a fifth meeting in December and signaled it may raise rates as early as next month to cool record debt growth.

The conclusion:

Norway’s politicians, central bankers and business leaders have joined forces in a push to weaken the currency. Kristin Skogen Lund, chief executive officer of the Confederation of Norwegian Enterprise, said krone gains were the “main” reason Norway’s exporters have a cost disadvantage.

And with that we return to the regularly scheduled C-grade gameshow infomercial straight from the G-20, titled: "The FX price is wrong; or let's lie to everyone just a little more."

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Yen Cross's picture

  Greedy bastards, isn't the spread in Brent/North Sea>West Texas enough for you?

tom a taxpayer's picture

Hmm. "make it seem…that the plunge in the Yen was an indirect, "unexpected" consequence of BOJ monetary policy". Kinda of like make it seem that a fire was an indirect, "unexpected" consequence of the pyrotechnic tear gas canisters.


CheapBastard's picture



Note to self....

Black Forest's picture

1 - From Bloomberg: "Norges Bank is ready to cut interest rates further to counter krone gains...

2 - The bank [Norges] signaled it may raise rates as early as next month to cool record debt growth.

So what?

LMAO's picture

"Low interest rates and falling unemployment have boosted private borrowing"

"Unemployment" in Norway is getting increasingly masked by pushing people into some disability or social welfare scheme in addition to the creation of non-productive govt' jobs. Soon enough everybody will be sucking the Gov teat. As anywhere else in Europe jobs are being exported to low cost countries in the hope that the oil will keep us afloat. The results of these disastrous politics will reveal themselves soon enough.

MoneyThangs's picture

Tear down this delation! - Hillary 2016 then Paul Ryan 2024 - the future is only going up from here people!

TheGardener's picture

"Leading to inflation that’s too low, we will act,"

Too low an extortion rate on citizens savings ? Let`s act now !

Stupid talk from someone scared of capital flight into HIS
currency area.

AnAnonymous's picture

'American' economics is a funny thing.

Funny how countries like Venezuela and now Norway, whose economy are bound to oil export, are compelled to try to sell cheaper their oil. Which is a finite and highly demanded resource.

You could hide as 'americans' do behind a racial view for Venezuela but what about Norway?

You have to give that to 'americans', they know how to plan to achieve the depletion of resources on a world scale.

Norway trying to destroy their own currency to sell more of their oil.

What an achievement.

'Americanism' is definitively the best thing to have ever happened to humanity.

disabledvet's picture

American wealth is "industrial" in nature and not resourced least historically. (Rather ironic given the Rockefellers actually.) Which makes this particular economic "epoch" all the more striking because it appears "all the world's commodities belong to industry" given the bailout (ultimately) of the war effort and apparently nothing else. Now why are those prices falling again?
hmmm. "i can print a car now." what else can i "print" then?
judging by those stock prices "just about anything."

q99x2's picture

Return Norway to the reindeer.

No Euros please we're British's picture

They're not devaluing their currency, they're just pining for the fjords.

VonManstein's picture

"The bank left its benchmark interest rate at 1.5 percent for a fifth meeting in December and signaled it may raise rates as early as next month to cool record debt growth."

"raise rates" !


Am i missing something here?

steve from virginia's picture



Norway petroleum production is declining sharply, that is its problem, not currency:


EIA data: maybe the country can trade aluminum to Iran for more crude.


BP data: look to 'Norway', the petroleum peak is easily seen. Norway is more of a petroleum pipsqueek than a powerhouse. It's production has declined by half since 2000. New plays will not make up for depletion elsewhere in Norway.





ptoemmes's picture

In "honor" of Paul Krugman (stay with me here) and with apologies to Jason Bourne, Currency Wars will henceforth be referred to (by me) as The Krugman Currency Ultimatum.


Orly's picture

The big take-away from the G-20 statement was:

"We reiterate our commitments to move more rapidly toward more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, and avoid persistent exchange rate misalignments, and in this regard, work more closely with one another so we can grow together."


While it has been clear that we have been running games behind y'all's backs, what with the European banks getting a stealth injection every Friday night, what we mean to do now is bring these moves into the open.  All pretense of "currency wars" be damned.  We are one economy now and we are in a world of trouble.  The only way out is to co-operate and fix each other's problems.

Bottom line: Risk-on, baby.  SPX 1715 or bust!


Yen Cross's picture

     The "gosh darn" yen can't even put in a proper 23.6%(fibi) retrace off that  high 70's floor?

  usd/jpy   { 77.091- 94.468 }  Retrace comes in @ 90.390.

Orly's picture

I'll be on the other side of that bet, myself.  EURJPY, actually.

Look for continuing in-flows into Euro and accelerated weakness in the yen.  I think a cupping formation with a top at  EJ 139 is not out of the question.  If Euro went to 1.4 and the yen did nothing, that would still leave a 6% appreciation in the EJ.

With in-flows back into Euro, watch for further flows out of the Aussie but because they pay to hold the A$, we may be near the end of the out-flows.  The RBA is expected to hold rates steady for some time, so movement in the Aussie may have peaked- for now.  Until it is risk-off again...


Yen Cross's picture

 Did I say anything about opening a position? ;-)  I'm having fun with gbp/aud & gbp/jpy.  gbp/usd is way over sold!

Orly's picture

I beg to differ regarding Cable.

It broke a years-long wedge pattern, as seen on the Weekly chart, to the downside and closed the week below the trendline.

Longs have piled back in and what you may see is a re-test of the trendline (now resistance...) at ~1.565.  GBPUSD will probably hug that line for a while but the impetus is definitely to the downside.

When Mark Carney comes in, he is going to add to the UK balance sheet in a big way.  The UK economy is now entering a triple-dip recession and things are going from bad to worse over there now.  So a break back into the wedge seems quite unlikely.


Yen Cross's picture

    To/Too each her/his own.  I respect you as a trader, and a person Orly. M/E and Russia/China like to clear trades through London.

    We trade on different time tables. I always respect your input.  ;-D

VonManstein's picture

cable heading for 1.50 IMO and GBP cross' will take down the USD cross' with it

Yen Cross's picture

  I like you. Cable is leading the way. I love trading London. New Pork sucks.

Orly's picture

I'll see your 1.50 and lower you to 1.42.


VonManstein's picture

Would you take parity?

Orly's picture

I'd sure take it but I don't see it getting that low.  Gilts would be crushed to dust if that happened...or vice versa.


SpykerSpeed's picture

Norway announces they're weakening their currency;  Bitcoin users unaffected.

ThirdWorldDude's picture

I've always wanted to know how you geeks fondle your bitcoins...

mkhs's picture

Without rubber gloves, you get a nasty shock.

Mountainview's picture

Every government is in the game. It's about government against privates. Gov's cover up their dismal balance sheets. They try to avoid the debt trap by inflating/devaluating and US/EU/UK/Japan will fail together.

We should follow the surplus providers in Arabia and the Far East of hints to escape the nightmare.

orangegeek's picture

Mr Olsen can shove is up his wife's fjord.

Haus-Targaryen's picture

Kill the euro and this problem goes away.

The two biggest problems with the worlds economy at the moment

1) The Euro
2) The Fed

In that order.

JuicedGamma's picture


Who are the clueless junking your comment?

a. they like the Euro?

b. they like the Fed?

Can't imagine WTF they were thinking.  The Euro I will say is convenient when crossing borders, however, there is no way to have a currency union without political union.  Ah maybe that's what "they" want!


NoWayJose's picture

How dare those Norwegians run a country today without massive deficits, huge national debt, and central bank bond buying! Let them reap what they sow!

JR's picture

Inflation is one of the bankers’ greatest profit centers. It’s also a serious burden for the people.

When the Governor of the Central Bank of Norway speaks like this, you know you’re hearing just another banker operative. In short, it’s a given Olsen’s just another player in favor of constant stealing. It’s incredible.

If it looks like a duck, walks like a duck, talks like a duck, it’s a duck.

In fact, from 2011 through 2012, Olsen made at minimum 16 speeches to the Bank for International Settlements (BIS).

While inflation has been pushing and contracting bubbles and busts these many years, stripping millions of trillions, the bankers deny there ever has been much danger. In other words, you can’t believe anything they say because their statements are all based on self interests.

The people reject this banker philosophy of constant price increases; they don’t want to see prices go up, period; they don’t want to see coffee go up a nickel. It’s only the bankers and their captive economists who preach inflation, i.e., illegal counterfeiting of the currency.

Inflations are not a result of capitalism and sound money. Rather, as Ron Paul puts it, “they are a direct result of paper money and a central bank that is incapable of managing it.”  The current monetary system tempts everybody (including the politicians) into debt, crushes incentives to save, encourages massive fraud, and plays havoc with savers and fixed income recipients by destroying the value of their principal.

And to make it worse this banker-controlled government taxes the negative interest “earned.” What does this say about their motives?

The people simply don’t know how to respond to this constant harangue by the pipers of printing - the media, the captured university economists, the counterfeiters de jour - parroting the banker rant that we need 2+ percent annual inflation; that if something costs $2.00 today, it needs to cost $2.04 or $2.16 next year.  This is the siren song that puts the power and influence into the hands of those who control the creation of the new money and enriches their friends who get to use the money first before it devalues.

To sum up, the deflation versus inflation debate is beside the point; we’ve had almost steady hard-hitting inflation since the inception of the Fed fiat system. We all know things don’t go down in price except products where there’s efficiency created. And that’s not deflation.

Unchecked currency destruction has led to the current global economic and political chaos –the handiwork of central bankers absent any restraints on money creation.

Yen Cross's picture

 Well done J.R.   Global ponzi prescript at it's "self adorned" postscript.

JR's picture

It's amazing, Yen. It seems that all major news events today focus primarily on the words and actions of the central bankers.

Through the corruption they have wrought, particularly in the electoral process, the country has become so divisive that half the country hates, despises, the other half. This involves millions of people. We’ve never had division in America with this intensity before. The same can be said of the EU.

The rise of the central bank as the controller of not only the nation’s finances, but as the control support for war and domestic programs, has cut the authority away from political leaders such as the president and members of Congress.

Not only business people, but professional people as well, consider the president’s remarks insignificant because they have learned that the critical decisions on the economy and funding for foreign and domestic programs are made by the central bank.

The market does not even respond to comments made by Obama. But every pause, inflection or suggestion made by Bernanke can move the indexes by a minimum of 1 percent.

This spells serious trouble for the nation in that Bernanke is not an elected official and, in fact, his deliberations and contacts and even his actions are generally kept secret.

The Founders gave the leadership and decisions on direction and policy to elected officials. The Constitution was clear on which divisions of government held the responsibility. But when they are no longer responsible, and the people know it, the country goes off track, in a direction that is known only to the investment bankers who own the central bank.

A perfect example of America off-the-track is funding from this nation to bankers located in foreign countries. When General Washington was to make his most critical assault, he called for only Americans to be on duty in key positions. What would the Founders have thought about giving American taxpayer money to foreign bankers for reasons known only to them?

And speaking of filthy lies, wasn’t it Chairman Bernanke who called Congressman Ron Paul’s suggestion about foreign funding by the Fed “bizarre”?

In all these Fed-enabled wars of every stripe - wars for oil, wars for Israel, trade wars, wars on so-called terror, wars for regime change, wars involving extreme competitions – Americans and innocent people are getting killed. And all the while Bernanke is taking U.S. money and giving it to foreigners; the who, what, why, when and where known only to himself and the owners of the Fed. The shock for American patriots who have sought to safeguard this country and the liberties for which the signers of the Declaration of Independence risked their lives is that these bankers are international, non-national; that Bernanke is non-national.

Americans had better tighten the straps on their survival jackets and prepare for rapids ahead; as economic chaos and civil disorder ensue, the primary concern will be to stop these international central bankers in their quest for world government by replacing the current Congress with men and women dedicated to sound money and national independence.

StychoKiller's picture

Check into "Single premium deferred annuity", and

Tax Lien Certificates.


JR's picture

Thanks! I'm interested!

trendybull459's picture

Untill the people stop to listen and respond to governmental flucks,like in Spain or Greece,untill people will let to those guys to put them spagetti on their years,provide expensive education,devalue agressivly and Monarch way the life savings,untill people do not get together-all this theater will go on untill your last 10pens in bacrupted bank will disapear.You have to crash monopoly of governments to print itself money as its long time got into robbery of those who really work and people starts to epply "barter" rules exchange,so government will loose most source of its revenie,by the way Russian black market money is balooning and Black today meaning good,because White today meaning Robbery!

we got new Forum in russia and in russian,but you can talk english(as most russians speaking it),to leave comments in translite or russian,what is good is that Russia absolutly free country if it apply to critics of their enemies,it takes some few minutes to be free from Big Brother watching being registred in

Monedas's picture

"Is that a sardine in your knickers .... or are you just venting pheromones .... because you want me to fuck you ?" .... Pick up line in Oslo

JR's picture

Trendybull459, I appreciated this remark on your site regarding the Next Great Depression:

"In the light of modern fiscal FED policies many of us watching how our life styles becoming misfortunes, single private banking entity irresponsible for bubbling our lifes at our expense without our agreement."

You have apply described the power of the central bank and the consequences impacting individuals that result from this secret world of the international banking cartel that has not only America, but the world, in its grip.

Good luck in your endeavor.

jtlien's picture

You can always tell a Norwegian Finance Minister, but you can't tell him much.

Usura's picture

The answer to this is simple for Norway and also for the Swiss:

Print mucho Krone

Trade these newly printed Krone for dollars

Use the dollars to buy gold


resurger's picture

Fuck this recovery, i cant afford to pay rent now, my rent is up by 15% already