Especially people with mortgages will be the winners of the expected crown party.
Danish Cekov, macro and currency strategist at Nordea Markets, believes so.
In mid-November this year one euro cost NOK 11.96, but the krona rose sharply after Norges Bank unexpectedly announced it would raise interest rates earlier this month. Furthermore, Norges Bank announced on Friday that it will drastically cut kroner sales in January, which is also positive for the krona exchange rate.
On Friday afternoon, one euro is therefore worth around NOK 11.20.
Better balance
But this is certainly not the best, believes Chekov. He expects the krona’s exchange rate to strengthen to around NOK 11 against the euro and NOK 10 against the dollar in the coming months, and then rise further.
– I think 2024 will be much better than 2023. There will be both lower sales of crowns and a better balance in the crown market, Chekov tells Nettavisen.
According to him, developments abroad are also in favor of the Norwegian krone.
– The US central bank is talking about cutting interest rates and, if this were to happen, the situation would certainly improve. This makes the dollar weaker and especially strengthens undervalued currencies such as the Norwegian and Swedish krona, says Chekov.
He believes the Norwegian krone has weakened more than Norway’s initially rock-solid economy would indicate. Investors looking for undervalued currencies with strong strengthening potential can therefore quickly end up buying Norwegian kroner.
– Bloomberg says 2024 will be a year when big hedge funds in currency trading will focus more on value, and then the Norwegian krone will stand out, says Cekov.
Norwegians are usually the winners
He points out that a stronger crown is not good for everyone. The losers will be especially exporters, such as agricultural companies, oil companies and industrial giants such as Hydro and Yara. The Norwegian state wants the same thing, also because the oil fund will be worth less.
– But a weaker krona is good news for Norges Bank, because it means that price inflation will slow down and we will be able to lower interest rates faster. So it’s good news for everyone who has a loan, says Cekov.
He points out that the big losers due to the weakness of the krona have been ordinary Norwegians and Norwegian families, and that they will also benefit most from a strengthening krona.
– One thing is that you notice that it is becoming more expensive to go on summer holidays abroad. Much worse is that many goods have become more expensive. It can be food, furniture, electronics and much more. And because the price increase was too high, Norges Bank raised the interest rate, thus also hitting Norwegian families. They are clearly the ones who came out worst off, she says.
2023-12-30 09:51:49
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