The US presidential election could have ripple effects on Norwegians' holiday plans.
– I think the krone will weaken in the short term with Trump, says chief strategist at Nordea Markets, Dane Sikov.
The US presidential election is fast approaching. On November 5, Americans will decide who will occupy the Oval Office starting January 20, 2025.
The battle is taking place between Donald J. Trump and current President Joe Biden.
Opinion polls show that Trump has a slight lead, about 220 days before Election Day, according to what was reported by Reuters. Thirty-five eight.
An already weak Norwegian krone could have consequences. There are several reasons for this. Here comes someone.
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according to Bloomberg Many other media outlets point out that all goods imported by the United States must have a global base rate of 10%. For Chinese goods, there is talk of a 60 percent tariff.
Sikov believes such a protectionist approach could help put pressure on prices in the United States and keep interest rates high. He is concerned that Norway is a small, open economy that relies on trade with countries such as the USA.
Norway also does not have a free trade agreement with the United States.
– You can say he's crazy or whatever you want, but Trump represents much worse news for countries that don't have a free trade agreement, says Sikov.
US Treasury Secretary Janet Yellen As reported by Reuters Trump's tariff plan will increase the costs of a wide range of goods that American consumers depend on.
In recent years, the US central bank, the Federal Reserve, has been raising interest rates in an attempt to lower prices.
The Norwegian Bank indicated that the weak krone contributes to high price growth. Many economists point out that the interest rate differential with foreign countries is an important factor affecting the krone and therefore the interest rate here also at home.
If we look at them separately, it is more attractive to put money in countries with higher interest rates. Explained very simply, it's a bit like choosing the bank that gives you the highest interest rate on your savings account.
– A toxic cocktail
The Nordea strategist says he generally believes the risk of a weaker krone is greater under Trump than under Biden.
– What are the differences between Trump now and when he ran for office last time?
“If you look at what Trump stands for now, it's a toxic mix with more of the same, but on a larger scale,” he says.
Sikhoff outlines a scenario in which several things could go wrong.
– If Trump wins, this is less beneficial for peace in the Middle East, and globalization is moving in the opposite direction with higher inflation and higher interest rates. He says: We and many small countries have been left in limbo and our currencies have become weaker.
– Immigration problem
Sikov says that Trump has made clear that he wants to limit immigration more than today, and that this is a popular policy in the United States.
– I was in the United States a short time ago and all the taxi drivers said that the United States has an immigration problem, he says.
According to the strategist, halting immigration could have dire consequences for the already tight labor market.
If Trump closes the border, the labor market will remain tight, which also indicates higher wage growth. It is clear that this will affect the price level and may lead to maintaining the interest rate level, Sikov says.
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