Norway's Krone Hits Weakest on Record Amid Trade Turmoil
Comment of the Day

October 16 2019

Commentary by Eoin Treacy

Norway's Krone Hits Weakest on Record Amid Trade Turmoil

This article by Sveinung Sleire for Bloomberg may be of interest to subscribers.

Norway’s krone hit the weakest on record against the euro, surpassing the previous record set during the 2008 financial crisis.

The krone touched 10.1641 per euro at 2:45 pm in Oslo, according to Bloomberg data, amid pressure from global tensions and weakening oil prices.

Norway is Western Europe’s biggest producer of petroleum products and gets almost half its goods exports from oil and natural gas.

Norges Bank has been puzzled by the weakening currency, a move that has allowed it to raise interest rates four times since September 2018. The central bank has increased its estimate on the currency’s equilibrium exchange rate, meaning that it now sees the weakening currency as a structural shift.

Eoin Treacy's view

Crude oil prices are close to breakeven levels for shale drillers, are challenging the profitability of newer offshore sites and are well below the fiscal breakevens for much of OPEC. That is putting downward pressure on the currencies of oil producers.

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