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Norwegian Krone greatly strengthened

The Norwegian Krone is greatly strengthened, and it has reached its highest level since June, which may force The Norwegian Central Bank to institute new interest cuts if the trend in the foreign exchange market continues.

The Norwegian Krone has increased significantly against both the euro and the American dollar since Norges Bank, the Norwegian Central Bank, held its interest rate meeting September 17.

The krone made another jump Tuesday afternoon while the euro rate fell from NOK 8.16 to 8.07, and the dollar rate fell from NOK 7.11 to 7.06.

Financial analysts in the foreign exchange market predicted that the krone would be so strengthened that the euro rate would decrease down to as far as NOK 8.00. At the same time, Harald Magnus Andreassen, economist at First Securities, stated that a strengthen krone rate may put pressure on Svein Gjedrem, head of the Norwegian Central Bank, to institute further interest cuts.

DnB Markets states in their morning report Wednesday that the krone has increased with 3.8 percent since its lowest level in July.

“The reason for the reversed development can mainly be found in the attitude change illustrated by Norges Bank. If the krone continues to strengthen many players will question if the basis for this decision has been changed,” stated DnB Markets.

Nordea Markets said a certain degree of increase was possibly expected, but the further development of the krone will be interesting.

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