Bloomberg News

Norway Says Swiss-Style Currency Cap Isn’t on Agenda

April 17, 2012

Norway’s central bank Governor Oeystein Olsen said policy makers have never discussed placing a Swiss-style cap on the krone amid speculation the bank may resort to such measures should the currency continue its ascent.

“We are very far from the Swiss situation and we have other measures,” Olsen said in an interview in Oslo today.

The governor has warned traders to be prepared for krone losses after cutting the benchmark rate 0.75 percentage point to 1.5 percent since December in an effort to check currency gains that kept inflation below the bank’s 2.5 percent target. While the measures were initially effective, the currency has returned to its appreciation trajectory, rising 1.3 percent versus the euro since March 28.

HSBC Holdings Plc, Europe’s largest bank, said this month the central bank may need to resort to a Swiss-style cap on the krone to stem gains. The Nordic currency has strengthened almost 4 percent since September, the month the Swiss National Bank pegged the franc to the euro to halt its rally.

The krone strengthened less than 0.1 percent versus the euro to 7.5454 as of 2:35 p.m. in Oslo. The currency was little changed at 5.7450 per dollar.

Norway, the world’s seventh-largest oil exporter, has been attracting investors amid concern Europe will fail to contain its debt crisis. The government has no net debt and the biggest budget surplus of any AAA rated nation, thanks to a $600 billion sovereign-wealth fund. Unemployment fell to 2.6 percent in March, Europe’s lowest rate. Norway, like Switzerland, isn’t a member of the European Union.

To contact the reporter on this story: Josiane Kremer in Brussels at jkremer4@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net


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