What is an exchange rate? An exchange rate is the price of a country's currency measured against that of another country, for example NOK per euro. The international foreign exchange market determines the exchange rate by creating balance between total demand for and supply of foreign currency.
What is meant by fixed and floating exchange rates? With a fixed exchange rate regime, the central bank is actively involved in the purchase and sale of currency in order to maintain the official exchange rate. With a floating exchange rate, as is the case in Norway, the exchange rate will reflect supply and demand in the international foreign exchange market. The krone exchange rate will therefore reflect the international value of the Norwegian krone.
What sort of exchange rates does Norges Bank quote? The exchange rates on Norges Bank's website are middle rates, i.e. the mid-point between buying and selling rates in the interbank market at a given time. Close to the time when the exchange rates are quoted, the European Central Bank (ECB) obtains a relevant exchange rate, for example, the number of Norwegian kroner for a euro, in the interbank market from banks and electronic trading systems, and sets the most accurate market rate possible at this point in time. In the case of currencies not covered by this reporting, Norges Bank obtains market rates from electronic information systems and/or banks. Because an exchange rate always expresses the relationship between two currencies, reporting from the central banks of other countries is used to calculate exchange rates in Norwegian accounting.
When are the exchange rates published? Publication time of daily exchange rates is approximately 16:00 CET. Exceptions are Wednesday before Maundy Thursday and New Year's Eve when Norges Bank's rates are set at 9.30 a.m. Exchange rates are not published on Christmas Eve.
Can I trade on the basis of Norges Bank's exchange rates? The exchange rates are only intended to serve as an indication, and are not binding on Norges Bank or other banks. Norges Bank's exchange rates are often used as a reference and for historical comparisons. Norwegian banks may have different routines for updating exchange rates used in transactions with the public. Because exchange rates are constantly changing, banks' rates may differ from Norges Bank's rates. Moreover, banks' rates have margins for buying and selling, whereas Norges Bank's rates are pure middle rates.