Oil price crash causes currency shock

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One man’s death is another man’s bread.

On Monday morning, oil prices plunged 29 per cent, after it became clear on Friday night that Russia would not join (Organisation of the Petroleum Exporting Countries) OPEC on a cut in production to boost oil prices.

Like many other commodities, oil has been put under severe pressure from weakening demand in the wake of the coronavirus.

Sources in Saudi Arabia reported Financial Times that the country will now open the cranes and pump far more, E24 wrote. Both OPEC and Russia will put pressure on poorly funded US shale oil producers.

The oil-rich country of Norway immediately sensed the effect of the fall in prices.

The Norwegian kroner depreciated significantly against the euro and the dollar. On Monday morning, the euro is now trading at 10.84 against the Norwegian krone, while the US dollar stands at 9.51 against it. A dramatic fall is expected when the Oslo Stock Exchange opens.

The euro and the dollar are by far the most important settlement currencies for farmed salmon.

All else being equal, it is favourable for Norwegian salmon exporters with a weakened krone. This means that Norwegian salmon will be cheaper to buy in local currency for foreign fish importers.