The Norwegian crown hit a new record high against the euro for the second consecutive day on Friday, boosted by comments made by the head of Norway's central bank in an annual speech late Thursday.
Svein Gjedrem, head of the Bank of Norway, told a gathering of the country's business and political elite that Norway may hold up against a global economic downtown with little impact on the economy or jobs.
He added that there was "continued risk" for a high rate of wage growth. Pay hikes that exceed a desired inflation rate of around 4 percent "will over time yield higher interest rates, lower employment and higher joblessness," Gjedrem said.
His comments were widely interpreted as meaning that the Bank of Norway will keep interest rates in the country high, in an effort to control economic growth. The board meets February 27, but investors now think chances are reduced that the board will cut rates. The current demand deposit rate is 6.5 percent.
And that makes the crown attractive against other currencies. At one point Friday morning it only cost NOK 7.7588 to buy one euro. Trading tested the one-month high against the dollar near NOK 8.89.
An analyst told Reuters that Norway's trade surplus of 16.4 billion crowns in January was lower that expected, but continued to provide support for the currency. Oil prices also have stabilized, and Norway already held a strong interest rate advantage over the euro zone.