Norway’s krone is at “a great entry point” versus the euro, according to Stephen Rosen, chief investment officer of the Omni Macro Fund, as the AAA rated country’s economic growth accelerates.
“We put on some exposure to Norwegian krone against the euro,” Rosen said yesterday in a phone interview from London. “This is one where we’ve had significant washout and is looking very attractive economically and from a financial stability point of view.”
The krone weakened 12 percent against the euro last year, the biggest drop since 2008. The depreciation followed a four-year rally as investors sought Norwegian assets as a haven amid concern that Europe’s currency union would unravel.
Norway’s seasonally adjusted gross domestic product, excluding oil, gas and shipping, rose 0.6 percent in the fourth quarter, after expanding 0.5 percent in the prior three months, Oslo-based Statistics Norway said today. The krone rallied as much as 0.5 percent to 8.3178 per euro, its strongest since Jan. 15.
“From the Norwegian aspect, there is potential for what we see as lows in interest rate yields now, and they had an inflation number that came out on slightly the high side, which has helped push euro-krone down,” Rosen said. Omni Partners LLP oversees $800 million and is based in London.
The krone strengthened as much as 0.9 percent on Feb. 10 against Europe’s common currency after Statistics Norway said consumer prices rose 2.3 percent in January from a year earlier, after increasing 2 percent in December. Economists surveyed by Bloomberg news predicted an increase of 2 percent.
Norway’s 10-year bonds yield 2.8 percent after falling to 2.71 percent on Feb. 5, the lowest since August. Yields on similar-maturity German debt have declined to 1.7 percent from 1.9 percent at the end of last year.
At the same time, it may be too early to bet on a rally in Turkey and South Africa’s currencies even after their central banks boosted interest rates, Rosen said. Turkey’s lira has gained 2.5 percent versus the dollar in the past five days while the rand has rallied 1.3 percent. The appreciation follows losses in January, in which all 24 major emerging-market currencies declined against the greenback.
“I would not favor going into the rand as a long position, and I think that even applies to Turkey,” he said. “Hiking rates is one way which dampens down growth. There’s a playoff here between the stability of the currency and trying to provide growth inputs to the economy.”