Swiss Franc to Norwegian Krone (CHF/NOK) Exchange Rate Strengthens after Norges Bank Cut Rates

The Swiss Franc strengthened versus many of its rivals on Thursday after the Swiss National Bank (SNB) kept the record-low cash rate of -0.75% on hold. The appreciation has been somewhat sluggish, however, after the central bank warned that it’s ready to take further action to reduce the impact of Franc overvaluation. Since the SNB surprised markets by dropping the 1.20 Euro ceiling, the Franc has appreciated by 15%. This undermines exports, and the situation in Greece could compound the restraints on the economy. ‘At minus 0.75 percent we’ve already gone quite far and we’re waiting to assess the effect,’ SNB President Thomas Jordan told the newspaper Schweiz am Sonntag last month. ‘Whether we need to go lower with the negative rates depends on international developments.’

‘Over the coming months, the global economic recovery is likely to lead to a gradual upturn in demand for Swiss products; this will cushion the impact of the exchange rate shock somewhat. As the global economy gathers momentum, we expect Switzerland to return to positive growth in the second half of the year. The SNB continues to anticipate growth of just under 1% for 2015 as a whole,’ stated the SNB.

The Swiss Franc to Norwegian Krone (CHF/NOK) exchange rate is currently trending in the region of 8.4020.

The Norwegian Krone dived versus most of its peers on Thursday as a result of Norges Bank cutting the benchmark interest rate to a record-low 1%. The decision was anticipated by most economists after Governor Oeystein Olsen stated a June cut was extremely likely to mitigate the risks of an oil slowdown. In addition to cutting the rate by 25 basis points, Olsen also stated that more policy easing is likely in autumn. ‘The current assessment of the outlook for the Norwegian economy suggests that the key policy rate may be reduced further in the course of autumn,’ Governor Oeystein Olsen said in a statement. ‘Developments in the Norwegian economy have been slightly weaker than expected and the economic outlook has deteriorated somewhat,’ Olsen added.

‘The Krone depreciation in 2014 will underpin inflation in the coming period,’ the bank said. ‘Further ahead, lower wage growth and fading effects of a weaker Krone will pull down on inflation. House prices have risen at a slower pace than expected, but household debt is steadily rising.’

The Swiss Franc to Norwegian Krone (CHF/NOK) exchange rate was trending within the range of 8.2763 – 8.4175 during Thursday’s European session.