Best Holiday Saving Tips Amid Weak Krone and Currency Trends

(Nettavisen): The winter holidays are just around the corner. Then it goes hand in hand with Easter, before many days off in May. And before you know it, summer vacation is knocking on the door.

The specter of interest hangs over us, and the krone is weak.

– What are your best holiday tips for saving a few thousand?

– The krone has weakened greatly against other currencies, so check what the euro, dollar or the local currency where you want to travel costs today, says Nordea’s private economist Derya Incedursun to Nettavisen.

At the time of writing, one euro costs DKK 11.34, while one dollar costs DKK 10.54 – before you have added on the currency surcharge from your bank.

Don’t be fooled by countries that have historically been “cheap”:

– Check the price level and the price trend in the country you have excelled at. In Norway we have had high price growth, but in other countries it may have been even higher, says Incedursun.

In Turkey, for example, there has been a price increase of 170 per cent, which we will return to shortly.

– Avoid these traps

Incedursun has no doubts: Considering price growth and exchange rates, it is typically Eastern European countries that offer great value for money.

– Where it is most expensive now is typically in countries with the euro as currency. Both in Spain and Germany it probably costs more than you are used to. This also applies to the United States, because the dollar is strong. Not to mention Turkey, which in the last two years has seen a price increase of 170 percent.

– Which traps should you absolutely avoid?

– When paying abroad with a payment card, choose the local currency. And if you are going to withdraw money from an ATM, say no thanks to the exchange rate that the ATM offers. Let the bank at home do the calculation, says the consumer economist.

Price examples

To emphasize how important it is to familiarize yourself with local conditions, Derya Incedursun takes us through these examples:

In the United States, prices have risen by ten percent in the past two years, and the dollar has become 16 percent more expensive. Imagine that you bought an item in the United States for $100 in 2022. Two years later, due to price increases, the price of this item has increased to $110. At the same time, the dollar has become stronger against Norwegian kroner, so now the same item will cost you NOK 1,122, up from NOK 880. This represents an increase of 27 per cent before we include inflation in Norway.

– But when we also take into account the fact that prices in Norway have risen by approximately 11 percent, the American product is approximately 15 percent more expensive for us now than it was two years ago.

In Spain, prices have risen by 9 per cent over the past two years, and the euro has become 13 per cent more expensive. Let’s say you bought an item in Spain for 100 euros in 2022. With the price increase over the last two years, the same item would now cost 109 euros. The euro has also become more expensive in Norwegian kroner, so the item will now cost you NOK 1,231, up from NOK 1,000. This corresponds to an increase of 23 per cent before we adjust for inflation in Norway.

– But after taking into account the Norwegian price increase of 11 per cent, we see that the product from Spain is approximately 12 per cent more expensive for us now than it was two years ago.

In Turkey, prices have risen by 170 percent in the past two years, and Turkish lira has become 47 percent cheaper. Let’s say you bought an item in Turkey for 100 Turkish lira in 2022. With the price increase over the last two years, the same item would now cost 270 lira. At the same time, the Turkish lira has become less valuable in relation to Norwegian kroner, so the same item will now cost you NOK 93, up from NOK 66. This is an increase of 40 percent.

– Prices in Norway have risen by 11 per cent and thus prices in Turkey for us Norwegians have increased by 29 per cent.

2024-02-26 21:34:41
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