(Bloomberg) --
Norway's krone hit its lowest level since the 2008 financial crisis as global trade tensions drive down the price of oil, threatening large parts of the Norwegian economy.
The krone touched 10.097 per euro on Wednesday in Oslo, its weakest point since December 2008.
The price of Brent crude has plunged about 12% since U.S. President Donald Trump last week ratcheted up his trade dispute with China, which then retaliated. The dispute is hurting global growth and demand for commodities. Norway is Western Europe's biggest producer of petroleum products and gets almost half its goods exports from oil and natural gas.
“The obvious culprit today is the renewed slide in oil prices,” said Andreas Steno Larsen, a currency strategist at Nordea Bank. “There's basically thin air above technically, which leaves NOK at risk ahead of the important CPI number on Friday.”
The trade turmoil comes as Norway's central bank prepares for an interest rate announcement on Aug. 15. The bank has signaled it's prepared to hike again as soon as September. Governor Oystein Olsen has surprised markets with his commitment to tightening. In June, he raised the key rate for a third time in less than a year.
Concern over the trade disputes' impact on the economy will likely weigh heavily on the Norwegian central bank's deliberations, though in isolation a weaker currency could make it easier to tighten again.
Weak economic data last week also weighed on the krone, with a purchasing managers' index showing a contraction in overall activity, while retail sales fell, household credit growth slowed and registered unemployment rose more than estimated in July.
| Norway Rushes to Hike Interest Rates Before Oil-Stoked Boom Ends |
--With assistance from Charlotte Ryan.
To contact the reporter on this story: Jonas Bergman in Oslo at jbergman@bloomberg.net
To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net
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