By Bo Nielsen
Jan. 15 (Bloomberg) -- Norway’s krone dropped for a third day against the euro as stock-market losses sapped investors’ appetite for smaller, less liquid currencies.
The krone slipped to the lowest level this week as the Dow Jones Stoxx 600 Index traded near the weakest in almost six weeks. The European Central Bank will probably cut its main interest rate by a half-point to 2 percent today, according to the median forecast of 60 economists surveyed by Bloomberg to try to revive the slump in Scandinavia’s biggest trade partner.
“Continued risk aversion on financial-sector woes point to krone and Swedish krona underperformance,” David Simmonds, head of foreign-exchange research in London at Royal Bank of Scotland Group Plc, wrote in a note today.
Norway’s krone depreciated 0.4 percent to 9.5062 per euro by 12:14 p.m. in Oslo. It weakened as much as 1.6 percent to 7.2969 against the dollar, the lowest level since Dec. 5.
Investors should sell both Scandinavian currencies against the Swiss franc today, Simmonds said. The franc appreciated 0.1 percent to 6.4610 per krone.
Sweden’s krona was at 11.0710 per euro, from 11.0787 yesterday, and fell 0.3 percent to 8.4078 versus the dollar.
The Swedish government’s budget deficit will reach 87 billion kronor ($10.3 billion) this year and 65 billion kronor in 2010, the Stockholm-based the National Debt Office said in a report on its Web site today. That compares with November’s estimate of a 23 billion-kronor deficit in 2009 and a 35 billion- kronor gap next year.
Government bonds in the region were mixed. The yield on Sweden’s 5.25 percent government note due March 2011 was little changed at 1.34 percent. The yield on Norway’s 6 percent bond due May 2011 slipped seven basis points to 2.34 percent. Yields move inversely to bond prices.
To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net
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