OSLO: Norway's central bank has a firm policy against intervening in the currency market and has no position on where the crown currency should be, central bank Governor Oeystein Olsen told national daily DN, confirming the bank's stance.
The crown has been hit in recent months by the plunge in oil prices and suffered its biggest intraday drop in decades on Monday. It recovered by the end of the day, but is still nearly 10 percent weaker against the euro and 22 percent weaker against the dollar than at the start of the year.
"Norges Bank has a clear policy that the interest rate is our tool," Olsen was quotes by the paper on Thursday.
"We have a board decision stating that we won't intervene to affect the crown's level." A fifth of Norway's GDP is generated by its offshore energy sector and the 45 percent drop in crude prices since June dragged the import weighted crown, the bank's preferred measure, to an all-time-low on Monday.
"We had a meeting (on Monday) summing up events and got an assessment of the driving forces," Olsen said. "But we were nowhere near having a crisis meeting." "In a situation where the oil price has fallen as sharply as now, it's obvious that the crown weakening works as a buffer that counters the negative effects on the economy," Olsen said.
The currency's weakness strengthens the competitiveness of Norwegian exporters outside the energy sector.
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