Norway Krone Drops as Weak Outlook Seals June Rate Cut

Norway’s krone plunged against the euro as manufacturing output declined more than estimated and a central bank survey revealed a weak outlook for the next six months.

The krone dropped as much as 1.4 percent against the euro, to the lowest level since March 19, and traded at 8.8298 as of 11:06 a.m. in Oslo.

Data on Friday showed Norwegian manufacturing output declined more than estimated and that an index of aggregate growth hit the lowest level since April 2009.

While the central bank has surprised markets “a lot” over the past year, “we expect the latest data to seal the deal” of a rate cut this month, said Kjersti Haugland, an analyst at DNB ASA.

Norway manufacturing output fell 2.9 percent, more than the estimated 1.7 percent drop seen in a Bloomberg survey. A separate report showed that the aggregate output index fell to 0.16 in the last three months.

“The oil service sector reported a marked fall in output,” Norges Bank said in its regional network survey. “Output growth has slowed somewhat more than contacts had envisaged in January. Many contacts referred to falling demand from petroleum-related enterprises.”

Norway’s central bank kept rates unchanged in May but reiterated it is prepared to cut rates again after easing in December. The bank in March also walked back a prediction of a more severe slowdown.

The bank’s next rate decision is scheduled for June 18.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE