Norway's Krone Recovers From 13-Year Low After Policy Decisionby
Central bank keeps rate at record low after September cut
Norges Bank officials seek `clarity on ECB policy': Citibank
Norway’s krone climbed from its weakest level in more than 13 years versus the dollar after the nation’s central bank kept its main interest rate at a record low amid sliding oil prices.
The krone gained at least 0.4 percent against all of its 16 major peers after the Norges Bank kept its overnight deposit rate at 0.75 percent, an outcome predicted by 16 of the 17 economists in a Bloomberg survey. The economy of Europe’s biggest petroleum producer has struggled as commodity prices slumped and failed to benefit from a weakening currency. This prompted policy makers to unexpectedly cut interest rates in September.
“Following the Norges Bank decision, markets have pared back slightly the probability of another rate cut,” said Josh O’Byrne, a London-based currency strategist at Citigroup Inc. “There was a small probability of a rate cut priced in today. Pricing that out is positive for the krone.”
The krone strengthened 0.7 percent to 8.5692 per dollar as of 11:25 a.m. London time, having touched 8.6787 earlier, its weakest since April 2002. Norway’s currency appreciated 0.7 percent to 9.3072 per euro, erasing losses made on Wednesday.
The Norges Bank didn’t provide any update to its September comments that it anticipated rates will be further reduced in “the coming year.” European Central Bank President Mario Draghi reiterated on Tuesday the ECB will consider increasing stimulus at its December meeting.
Norwegian officials would need more data and “clarity on ECB policy to make a better judgment on if the economy is going to deviate significantly from what they saw in September,” O’Byrne said.