FOREXYARD: Forex News Blog

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NOK Turns Bullish, But For How Long? Posted: 15 Mar 2012 04:01 AM PDT After tumbling against its main currency rivals during yesterday's trading session, the Norwegian krone began to correct itself during the overnight session. Following the surprise decision from Governor Oeystein Olsen to cut the overnight deposit rate in Norway, the EUR/NOK shot up over 1200 pips reaching as high as 7.5919. Against the US dollar, the krone went up over 1100 pips, reaching as high as 5.8368. That being said, in a sign that the effect of the interest rate cut would be short lived, both currency pairs began showing signs of bearish momentum during the Asian trading session. The decision to cut the interest rate was made after the krone rose to a 9-year high vs. the euro. While the Norwegian central bank said that it would not tolerate the continued strengthening of the krone, analysts were quick to warn that the cutting of interest rates may not be a viable way to depreciate the currency. Historically, the krone's value is much more dependent on the global price of oil rather than any decision made by Norway's central bank. The combination of increased demand in the US for crude oil and recent tensions in the Middle East, have kept the price of oil well above $100 a barrel in recent weeks. It would appear that before any viable depreciation in the krone is to take place, the price of oil may need to fall.

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