- Investment unit says selloff on crude oil slide is overdone
- EUR-NOK exchange rate may drop 10 percent over six months
UBS AG’s investment unit is holding onto its lone trade in Group-of-10 foreign exchange, to sell the euro and buy the krone, even after Norway’s currency plunged this week.
The Norwegian currency slumped 1.8 percent against the euro Tuesday, extending Monday’s 1.5 percent loss. UBS’s wealth management unit, which oversees $1.9 trillion of invested assets, says it holds positions for six months and is confident the krone will rally in that time.
"Markets are still too negative on Norway," Constantin Bolz, currency strategist at UBS Wealth Management, said by phone from Zurich. The nation’s currency will benefit from an improving European economy, which is offsetting the damage from a 30-percent plunge in oil prices, he said. "Current levels, which are levels we saw during the global financial crisis, are probably not justified."
UBS sees the krone rallying as much 10 percent to 8.60 against the euro from 9.5660 as of 1:33 p.m. in New York. Currencies of oil-exporting nations, including Norway and Canada, plunged this week after the Organization of Petroleum Exporting Countries effectively scrapped production targets at its latest meeting.