High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/b3ee611c-629b-11e5-a28b-50226830d644.html#ixzz3meJcKAMj Norway’s krone dropped below parity against its Swedish neighbour and fell to a 13-year low against the dollar on Thursday after the country’s central bank wrongfooted the market with a surprise rate cut. An accompanying statement added further weight to the krone’s losses, highlighting the harm being inflicted by falling prices of oil — Norway’s main export — on the country’s economic outlook. The currency fell 2.2 per cent to NKr8.4607 against the dollar, its lowest since May 2002, and was down by a similar amount against the euro to NKr9.4818. The krone fell 2.3 per cent to SKr0.9923 versus Sweden’s krona, falling below parity and to its lowest level since December. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/b3ee611c-629b-11e5-a28b-50226830d644.html#ixzz3meJfxMwt Norges Bank, Norway’s central bank cut its deposit rate by a quarter of a percentage point to a record low of 0.75 per cent. The move took the market, which was expecting the bank to hold fire this month, by surprise after a second cut in four months. The central bank added to the dovishness by stating the outlook for the Norwegian economy “suggests that the key policy rate may be reduced further in the coming year�. Governor Øystein Olsen added: “Growth in the Norwegian economy is likely to remain low for a longer period than projected earlier owing to the fall in oil prices through summer. Oil investment is expected to fall to a further extent than projected in June, and lower demand for goods and services from the petroleum sector will reduce activity in other parts of the economy.� Carl Hammer, a currencies analyst at SEB, who warned his clients to brace for a slide under parity in the Norwegian/Swedish exchange rate several weeks ago, said: “It was a close call this time as the krone is already very weak. “An output gap is opening up, inflation will come lower and leading indicators are pointing to a clear and possibly material slowdown. Another cut is clearly possible in December which the market is already pricing.� High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/b3ee611c-629b-11e5-a28b-50226830d644.html#ixzz3meJiZuQW Aurelija Augulyte at Nordea added: “Unexpected. Panic mode. Worst yet, they indicate a 0 per cent rate is possible if financial stability concerns are ignored. What then — QE? The dovish bias is clearly impacted by the Fed and China’s recent data.� Sweden’s krona, meanwhile, strengthened against both the dollar and the euro, climbing 0.4 per cent to SKr8.4031 versus the US currency and adding 0.2 per cent to SKr9.4149 against the single currency.

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