LONDON: Norway's crown plunged to its lowest in more than a decade against the dollar on Friday, a day after its central bank unexpectedly cut interest rates to boost growth as oil prices slid further.
Brent crude sank to a 5-1/2-year trough below $63 on Friday, inflicting yet more pain on those currencies, including the Canadian dollar as well as the crown, whose economies rely heavily on oil exports.
Norges Bank said lower oil prices were behind Thursday's 25 basis point rate cut, and that it could well ease policy further.
The dollar rose as high as 7.3950 crowns on Friday, its strongest since September 2003, before edging back to 7.3444, up 0.8 percent on the day.
The Canadian dollar hit a 5-1/2-year trough against the greenback at C$1.5591, down over half a percent on the day.
"Another big drop in the oil price would be very negative for these currencies and you also have some repricing of policy expectations," said Stephen Gallo, European head of FX strategy at BMO Capital Markets in London.
"For the Bank of Canada it's a question of them hiking rates later, and for the Norges Bank, it's a question of them cutting rates again ...to limit the impact of falling oil prices.
But against its currency basket the US dollar fell 0.4 percent as traders reduced risk ahead of next week's Federal Reserve policy meeting.
"Firm November data continues to point to a hawkish adjustment in forward guidance at next week's FOMC meeting and we expect this to keep the dollar well supported into year-end," analysts at BNP Paribas wrote in a note to clients.
BNY Mellon analysts wrote that the December/January meetings "seem like an appropriate period to begin the rate hike-signalling process."
The Swiss franc inched closer to the Swiss National Bank's three-year-old cap of 1.20 francs per euro, hitting 1.20085, its highest in 27 months, buoyed by safe-haven inflows and after the SNB surprised some by keeping interest rates on hold and resisted preparing the ground for negative rates.
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