By Gwladys Fouche and Tommy Wilkes
OSLO/LONDON, Dec 24 (Reuters) - Norway’s currency weakened further on Monday, costing as much as 10.00 crowns per euro for the first time since December 2008, Refinitiv Eikon data showed.
Analysts blame the currency’s weakness on a recent fall in the price of crude oil, Norway’s top export, as well as global stock market turbulence and weakness in the euro zone domestic economy.
Norway is not a member of the European Union but trades in the European single market as a member of the European Economic Area.
The crown dropped more than 0.2 percent on Monday to as low as 10.00 crowns per euro before settling at 9.977. The Norwegian currency has lost more than six percent of its value since mid-October, as energy prices skidded lower.
The crown has also weakened against the dollar, down nearly eight percent since October to its lowest since early 2016, but it bounced off those lows on Monday to 8.76 as the U.S. currency fell across the board.
“When oil prices collapse, and global growth deteriorates, NOK (the Norwegian crown) will move more to the downside, at least initially,” said Stephen Gallo, European head of FX strategy at BMO Capital Markets, predicting more weakness over the next 3-6 months.
“Norway has a very weak external position when you exclude oil and gas exports from the picture,” he said, adding that markets had pared back rate hike expectations from the central bank given falling oil prices and rising global growth worries.
The Norwegian central bank left its key policy rate unchanged at 0.75 percent at its last rate meeting this month but said it would stick to its plan to hike rates in March despite ongoing turbulence on financial markets.
In the medium to longer term, the strength of the Norwegian sovereign wealth fund should support the crown and keep a floor under its falls, said Gallo, referring to the Nordic country’s $1 trillion sovereign wealth fund, the world’s largest. (Editing by Toby Chopra)