Norway Krone Falls as Central Bank Intervenes

The Norway krone declined today after the Norway central bank announced its plans to purchase foreign currency, weakening the nation’s currency.

Norges Bank announced yesterday that it’s going to buy foreign exchange equivalent to 1.6 billion kroner per day for the Government Pension Fund Global. The announced size of purchase was bigger than most analysts have anticipated. Fed Vice Chairman Janet Yellen and other central bank officials have said the central bank should be prepared to do more to spur growth as policy makers prepared for a two-day meeting that starts tomorrow. The central bank left the key policy rate unchanged at 2.25 percent. Bank’s Governor Øystein Olsen signaled about possible interest rate cut, but also suggested that an interest rate hike isn’t out of question:

If the turbulence abroad intensifies and the outlook for growth and inflation weakens further, the key policy rate may be reduced. If there are prospects for higher growth and inflation, the key rate may rise earlier.

USD/NOK was rising today for the third straight day, reaching 5.6636 as of 10:58 GMT after opening at 5.5472.

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