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Krone Strengthens Against Euro on Safety Bid Amid Debt Concern

The Norwegian krone strengthened versus the euro as investors sought the safest assets amid concern that the European debt crisis may worsen.

Sweden’s krona also rose versus the 17-nation euro as the European Central Bank was said to buy Spanish and Italian government bonds in a bid to stop the euro-region’s fiscal crisis from spreading. The Swiss franc and Japanese yen, traditionally havens from financial turmoil, appreciated after Standard & Poor’s cut the U.S. credit rating one level to AA+ from AAA on Aug. 5.

The krone is “a good destination for investors to park some of their money as a safe haven,” said Carl Hammer, chief foreign-exchange strategist at Stockholm-based SEB AG. Today’s gains in the krone and krona are “a sign of strength and of defensive qualities for both currencies,” he said.

Norway’s krone appreciated 0.4 percent against the euro to 7.7904 as of 5:42 p.m. in London. It weakened 0.3 percent to 5.4903 per dollar. The krona strengthened 0.6 percent to 9.1953 versus the shared European currency, and was little changed against the dollar at 6.4745.

Norway’s central bank announces its interest-rate decision on Aug. 10. The bank will raise its overnight deposit rate by 25 basis points to 2.5 percent, according to the median estimate of 14 economists surveyed by Bloomberg News.

Policy makers in June left the rate unchanged at 2.25 percent and signaled they may raise as soon as this month. Still, Norges Bank Governor Oeystein Olsen said in a June interview that the bank is ready to rethink its rate plans should the debt crisis spread to bigger European countries.

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