Norway Krone Extends Weekly Drop to Most Since 1992; Krona FallsDavid Goodman
The Norwegian krone weakened for a fifth day against the dollar, extending its weekly decline to the biggest since September 1992.
Norway’s currency weakened beyond 8 per euro for the first time since December 2010 after the central bank predicted yesterday its benchmark interest rate may be lower in the year ahead. The Swedish krona dropped the most today in two months. The dollar has strengthened against all its major counterparts since Federal Reserve Chairman Ben S. Bernanke said June 19 policy makers may begin paring asset purchases this year.
“Norges Bank tweaked their bias toward a slightly more looser policy stance,” said Paul Robson, a senior currency strategist at Royal Bank of Scotland Group Plc in London. “The meeting came at an unfortunate time as a slightly more negative tone for the currency was met with illiquid markets as global financial markets de-risked in response to the Fed. We think the move is overdone.”
The krone slumped 1.7 percent to 6.0997 per dollar at 4:53 p.m. London time, having tumbled 6.3 percent this week, the most since the period ended Sept. 18, 1992. The currency declined to 6.1160, the weakest since July 25.
Norwegian currency fell 0.9 percent to 7.9988 per euro after dropping to 8.0031, the weakest since December 2010. The currency has declined 4.7 percent this week.
Norges Bank kept its benchmark rate at 1.5 percent yesterday and predicted it would be 1.38 percent in the fourth quarter, versus an earlier forecast of 1.45 percent.
The Swedish krona slipped 2 percent to 6.7065 per dollar, the biggest decline since April 17. It dropped 1.2 percent to 8.7952 per euro.
Norway’s krone has weakened 4.4 percent this year, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. Sweden’s krona rose 2.3 percent.