Especially people with mortgages will be winners of the expected krone party.
Dane Cekov, macro and currency strategist at Nordea Markets, believes so.
One euro cost as much as NOK 11.96 in mid-November this year, but the krone rose sharply after Norges Bank unexpectedly announced that they increased the interest rate earlier this month. In addition, Norges Bank announced on Friday that it will sharply cut krone sales in January, which is also positive for the krone exchange rate.
On Friday afternoon, one euro is therefore around NOK 11.20.
Better balance
But this is far from the top, Cekov believes. He expects the krone exchange rate to strengthen to around NOK 11 against the euro and NOK 10 against the dollar over the next few months, and then rise further.
– I think 2024 will be much better than 2023. There will be both lower krone sales and a better balance in the krone market, says Cekov to The online newspaper.
He also says that developments abroad are in the right favor for the Norwegian krone.
– The American central bank is talking about interest rate cuts, and if that happens, it will certainly improve the situation. This makes the dollar weaker, and it will particularly strengthen undervalued currencies such as the Norwegian and Swedish krone, says Cekov.
He believes that the Norwegian krone has weakened more than what the initially rock-solid Norwegian economy would indicate. Investors looking for undervalued currencies with the potential to strengthen strongly can thus quickly end up buying Norwegian kroner.
– Bloomberg talks about 2024 being a year when the big hedge funds in currency trading focus more on value, and then the Norwegian krone stands out, says Cekov.
Usually Norwegians are winners
He emphasizes that a stronger krone is not good for everyone. Exporters in particular, such as farming companies, oil companies and industrial giants such as Hydro and Yara, will lose out on a stronger krone. The Norwegian state wants the same, partly because the oil fund will be worth less.
– But a weaker krone is good news for Norges Bank, because it means that price inflation will slow down and we will be able to get interest rates down faster. It is therefore good news for everyone with a loan, says Cekov.
He points out that the big losers as a result of the weak krone have been ordinary Norwegians and Norwegian households, and that they will also benefit the most from a strengthening of the krone.
– One thing is that you notice that it is becoming more expensive to go on summer holidays abroad. Far worse is that so many goods have become more expensive. It can be food, furniture, electronics and much more. And since the rise in prices has been too high, Norges Bank has raised the interest rate, so that Norwegian households have been hit too. They are clearly the ones who have come out worst from it, he says.
2023-12-30 10:36:43
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