Norway Krone Slumps as GDP Data Revives Rate Bets
The currency dropped as much as 1.4 percent to 8.0023 per euro, and traded at 7.9857 as of 10:33 a.m. in Oslo. It fell as much as 1.3 percent to 5.9825 per dollar. The krone was the biggest loser after the New Zealand dollar against the two currencies among 16 major currencies tracked by Bloomberg.
Gross domestic product, excluding oil, gas and shipping, increased 0.2 percent, after expanding a revised 0.6 percent the prior quarter, Oslo-based Statistics Norway said today. Growth was seen at 0.7 percent, according to median estimate in a survey of 13 economists by Bloomberg. Total output expanded 0.8 percent, missing an estimate for 1 percent growth.
“After this number, a rate cut is not out of the question anymore, as some have argued,” Kjersti Haugland, an analyst at DNB ASA, said by phone. “We do, however, see that since the inflation figure was released the probability of a rate cut in September is significantly lower.”
Norway’s central bank kept its benchmark interest rate at 1.5 percent in June and signaled an increased chance for a rate cut next month to support growth and prevent inflation from slowing further. Data had since revealed a strengthening economy, including higher-than-estimated industrial production, retail sales and inflation, damping expectations of a reduction.
Consumer spending grew 0.2 percent in the quarter, while investment gained 5.1 percent. Exports rose 2.2 percent. Petroleum and shipping increased 3.5 percent and final domestic use of goods and services rose 0.3 percent in the period.
Policy makers have kept borrowing costs unchanged since March 2011 to limit gains in the krone, which emerged as a haven from the euro crisis. A report last week showed the euro area surfaced from its record-long recession, promising to support exports from Norway.
Norges Bank predicts Norway’s mainland economic will grow 2.5 percent this year and 2.75 percent in 2014.
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