Published: 4 Apr at 6 PM Tags: Euro, America, Eurozone, USA, Norway,
Over the past four years the Krone has strengthened by more than 20 per cent against the Euro, and Norway
â€™s central bank is finding it increasingly difficult to conduct fiscal policy as a result.
Inflation has lingered below the Norwegian central bankâ€™s target rate of 2.5 per cent since 2009 due to the Kroneâ€™s rise, and in light of the ongoing Eurozone crisis the damage to exporters is growing.
In 2012 Norwayâ€™s exports experienced growth of 2.9 per cent. The nationâ€™s central bank is estimating that that figure will drop to 0.5 per cent this year.
Last month Norges Bank held the nationâ€™s benchmark interest rate at 2.4 per cent, but also indicated that the financial institution was prepared to take action if the Kroneâ€™s advance continued.
Today Oeystein Olsen, Governor of Norges Bank, asserted: â€˜A higher key policy rate might have curbed debt growth and demand pressures in the Norwegian economy. But in an environment of persistently low external interest rates, such a policy would likely have led to a sharp appreciation of the Krone, resulting in too low levels of inflation and economic activity.â€™
Olsen added: â€˜The crisis in Europe and weak growth in the US are also contributing to keeping interest rates in Norway at a low level.â€™
The Krone gained modestly against the Euro after the European Central Bankâ€™s rate announcement. The ECB held the benchmark rate at 0.75, a record low, and Mario Draghi (ECB President) intimated that policy makers are willing to implement additional policy easing in order to prevent the economy of the 17-nation currency bloc from deteriorating further.
As of Thursday, 4th April 2013, the Pound Sterling currency rates mentioned within this news item were as follows:
GBP EUR exchange rate was 1.1782, GBP USD exchange rate was 1.5231, and GBP NOK exchange rate was 8.81.