Krone Slides as Unemployment Rate Highlights Cost of Oil Slump

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Norway’s krone slid the most in more than two months against the dollar as a report showed the unemployment rate rate unexpectedly rose in June.

The currency of western Europe’s largest oil producer fell versus all of its 16 major peers. The jobless rate jumped to 4.5 percent from 4.3 percent, according to a report from Statistics Norway in Oslo on Wednesday. Economists surveyed by Bloomberg predicted that the reading would be unchanged from May.

Norway’s currency is suffering from falling investment amid a slump in oil prices that’s proving to be painful for a nation that depends on petroleum-related products for almost half its exports. That’s fueling speculation that the central bank will cut borrowing costs further after reducing its main interest rate to a record-low 1 percent in June.

The outlook for the krone is “still negative given we have not seen the full effects of lower oil price on the economy,” said Carl Hammer, chief foreign-exchange strategist at SEB AB in Stockholm. While some long-term investors may judge the currency to have fallen to levels that are attractive “it is too early to pile in,” he said.

The krone slumped 1.4 percent to 8.3439 against the dollar as of 4:28 p.m. London time, the biggest drop since June 18. Against the euro, it was 0.3 percent weaker at 9.5054, after reaching reaching 9.5563 on Tuesday, the weakest since Dec. 16.

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