Krone, the major currency of Norway has got down to its lowest figures in the last 2 months, in comparison with Euro, the shared currency of Euro region. The Deputy Governor of Norway’s Central Bank, Jan F. Qvigstad hinted that if the currency strength stays persistent, the next rate decision of the bank in March may get influenced. Qvigstad also stated that despite of the fact that Krone is currently at a record strength, people have not been able to make much profit out of it, because of the limited liquidity in the Norwegian market.
Krone has actually emerged as a haven because of the European debt crisis and today, it slid down by 0.8% against Euro (Current price is 7.4205 per Euro). The currency is at its lowest level currently since 31st October. Krone has also slumped against USD by 1.2% and is currently priced at 5.5540 per USD. The currency is actually today’s worst performing major currency against both greenback and Euro.
The Senior Currency Strategist of Deutsche Bank AG, Henrik Gullberh stated that Norway policy makers are trying to talk Krone down. Henrik added that the Central Bank of Norway is not comfortable with the rise of Krone that it experienced in the recent times.
Incidentally, the overnight deposit rate of the bank has been kept fixed at 1.5% for a 5th meeting in last month. However, as the household credit fueled because of low borrowing cost, thereby sending the house prices to record high, it has already been signaled that the rate may be increased. House prices have doubled in the last 12 years and experienced a price increase of 7.7% in 2012. The statistics was released by the Norwegian Association of Real Estate Agents. The import-weighed Krone Index has reached 84.7 in January, marking its strongest value in last 14 years. The index has already gone ahead of the bank’s forecast for 2013. Incidentally, a stronger currency is denoted by a lower reading of this index.
When it comes to Norway’s economy, it is currently withstanding the recession in Euro area. Norway is the 4th richest country in the world per capita and total investment in its petroleum industry is on a record high currently. Norway is actually backed by a wealth fund worth $700 billion and has the biggest budget surplus of any of the AAA rated nations.