Norway’s Krone Sinks as Weak Economic Data Trigger Selloff

Norway’s krone fell the most against the euro in more than four months amid signs manufacturing is contracting and demand for credit is slowing.

The krone dropped as much as 2 percent against the euro, the biggest decline since January, and hit 8.6597 as of 2:46 p.m. in Oslo. It traded 2.5 percent lower against the dollar at one point on Monday, slumping to a 1 1/2-month low.

Reports showed Norwegian manufacturing unexpectedly contracted at the fastest pace in almost two years in May and that credit growth slowed in April, putting pressure on the central bank to respond with an interest rate cut.

“At the May meeting, Norges Bank mentioned credit growth as one of the arguments for not cutting rates,” said Erlend Loedemel, chief economist at Arctic Securities in Oslo. “Today’s data seem to remove a barrier for a June 18 rate cut, which continues to look quite likely in our view.”

Norway’s central bank kept rates unchanged in May but reiterated its readiness to cut rates again after easing in December. The bank last month also walked back a prediction of a more severe slowdown.

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