Norway to Tackle Low Crude Prices With Weaker Krone

Norway to Tackle Low Crude Prices With Weaker KroneNorway to Tackle Low Crude Prices With Weaker Krone

Norway is embracing a slump in the krone that Finance Minister Siv Jensen says will act as a buffer to protect western Europe’s biggest oil exporter from plunging crude prices.

A weaker currency, together with monetary policy measures, will be a first line of defense around the economy before the government considers additional measures, Jensen said, Bloomberg reported. A weaker krone “is one of the cushions that we have,” she said. Once the full effect of the exchange rate has been felt, then “we are willing, and able, to put other measures forward,” she said.

A 60 percent drop in Brent crude since a June high has pummeled an economy that relies on fossil fuels to generate more than one-fifth of its gross domestic product. While the rout in oil markets has dragged the krone down 27 percent over the same period, that development has supported non-oil exporters including Yara International ASA and Norsk Hydro ASA.

“For the time being we don’t have an escalating situation,” Jensen said. The government is looking at “the overall picture of the Norwegian economy,” she noted.

Norway’s government already plans to spend a record amount of the nation’s oil wealth -- or about 6.4 percent of GDP -- this year to support the economy.