Outlook for Interest Rates Hike Boost Norwegian Krone
The Norwegian krone jumped today to the highest level since April as the bets on the future interest hikes increased after Norway’s central bank expressed desire to increase the rates to the ”more normal level”.
The central bank left the benchmark deposit rate at the previous level of 2 percent. Yet the bank’s Executive Board hinted in its monetary policy statement that the interest rates increases are possible in the future:
The consideration of guarding against the risk of future financial imbalances that may disturb activity and inflation somewhat further ahead nonetheless suggests that the interest rate should be gradually brought closer to a more normal level.
The bank’s policy makers clearly desire to raise the rates but haven’t enough incentive yet. This may change in the future as the bank reported the economic activity among Norway’s biggest trading partners, including Germany, increased more than predicted.
USD/NOK slipped from 5.9565 to 5.8868 as of 20:03 GMT today, following the slump to 5.8667, the lowest level since April 27th. Today was the third straight day of declines for the currency pair.
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Earlier News About the Norwegian Krone:
- Norway's Krone Falls on China's Reserve Requirements (2010-02-13)
- Crude Oil Advance Favors Norway's Krone (2010-02-09)
- Norway's Krone Falls on Central Bank Warning (2010-02-03)
- Norwegian Krone Tumbles as Commodities Rally Slow Down (2010-01-12)
- Norwegian Krone Falls From 16-Month High (2010-01-08)