Norwegian Krone Declines on Manufacturing & Crude Oil Prices

The Norwegian krone weakened today, posting the fourth day of losses versus the US dollar, after the report showed that the manufacturing expanded less than was predicted and as the crude oil prices declined.

The Norwegian manufacturing output expanded 2.2 percent in December from the previous year, frustrating the analysts who predicted the 4.2 percent gain. The futures on the crude oil declined 0.6 percent as the concerns about the impact of the unrest in Egypt on the oil supply eased.

The lower-than-expected manufacturing growth reduced the probability of the interest rates increase by the Norwegian central bank, the Norges Bank, to ease the inflation pressure. Some analysts, including Henrik Gullberg, the currency strategist at Deutsche Bank AG, think that the krone will appreciate. Yet the gains will be determined by the oil prices and the central bank. For now, the Norges Bank seems to be very dovish and this can limit gains of the Norwegian currency.

USD/NOK rose from 5.7607 to 5.7798 as of 21:30 GMT today and reached earlier its intraday high of 5.7946, the highest level since January 31.

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