PM Solberg speaking to Bloomberg yesterday while attending a Nordic Council meeting
- the rapid weakening of Norway's krone will only provide short-term relief to western Europe's biggest oil producer. In the longer term, the loss of liquidity and increased volatility pose a threat to businesses struggling to plan investments.
"It helps some of those industries that have been suffering a bit on competitiveness. But it's not good for a country in the long run to have an unstable currency because you also need to be able to long-term plan when you are doing investments."
On 24 Sept Norway cut interest rates in an unexpected move that I reported here and saw the ccy plunge more then 3% against the euro at one point during the day.
Norway's krone has plunged more than 20% against the US$ over the past year. It's the worst of the 10 major currencies tracked in the Bloomberg Correlation Weighted Index in the period. Over the past three months, it's displayed the biggest increase in volatility against the euro of the major currencies monitored by Bloomberg.
But Solberg's warning that the trend may pose a threat to the economy is at odds with the message coming from the central bank. Governor Oeystein Olsen says he welcomes the decline in his nation's currency because it helps exporters.
Solberg underscored her government's commitment to weaning Norway off its oil addiction. Almost a quarter of output and one in nine jobs are dependent on the petroleum industry in Norway.
"We must make sure our economy has more feet to stand on"
Bloomberg has more here
Norway's PM Solberg coming out fighting
