Norway's Krone Slides to Lowest in a Year
(Bloomberg) -- Norway’s currency slid to the lowest level in almost a year amid a drop in oil prices and may face further pressure heading into 2019.
The krone fell for a third day against the euro as the price of oil, the country’s main export earner, slumped on Tuesday to more than a one-year low. The currency is likely to keep trading on the back foot as liquidity dries up in the year-end, according to Nordea bank Abp and SEB AB.
“The krone is traditionally vulnerable in December as the market seems to turn one-sided,” said Richard Falkenhall, a strategist at SEB in Stockholm.
The krone is the worst performing Group-of-10 currency against the euro in the second half of this year. It has weakened 3.7 percent against the common currency over that period amid worsening risk sentiment in financial markets, a drop in oil prices from an almost four-year high and as the central bank plans to raise rates at a slower pace.
The krone fell 0.9 percent to 9.9004 per euro by 11:56 a.m. in London. The slide in the second half of the year has erased gains in the first half, when it was the second-best performer behind the yen. It led Credit Agricole SA on Tuesday to close its long krone trade recommendation.
New Year’s Eve may not provide any cheer as the central bank holds its last auction of the year to provide the banking system with liquidity through its so-called F-loans. This may temporarily weigh on Norwegian interbank rates and the krone, according to Martin Enlund, an analyst at Nordea.
The combination of tighter market liquidity and excess krone liquidity will weaken the currency just before and after Christmas, Enlund said.
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