[19] it also raises inflation for domestically produced goods and services through the effect of the exchange rate on the. Market expectations for the interest rate differential against other countries will then increase to about the same extent as expectations for norwegian interest rates. Exchange rates norges bank's exchange rates are middle rates, i.e.
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The london wmr 4pm fix (or. Valutakursene er ment som en indikasjon. A weaker currency directly pushes up imported inflation.
This uncertainty, which is indicated by the costs of hedging against future exchange rate fluctuations in the short term, is now relatively limited for the norwegian krone.
The domestic currency appreciates in response to higher expectations of the real interest rate diferential between the domestic and foreign economies, adjusted for risk. 1 introduction in the summer of 2013, the london wmr 4pm fix moved from the ne print of foreign exchange contracts to the headlines of newspapers. The krone exchange rate and altered expectations] let me conclude. This chart illustrates that developments in the real exchange rate are dominated by the nominal exchange rate and that both depreciate under inflation targeting.
