HSBC’s Bloom Backs Norwegian Krone After Slump to 2 1/2-Year Low
Investors should buy the krone against the euro after the Norwegian currency fell to the weakest in 2 1/2 years last month, according to David Bloom, global head of currency strategy at HSBC Holdings Plc in London.
The krone slumped 3.4 percent in the past month, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-market currencies, the worst performer after the Australian dollar. It tumbled the most in more than four years versus the U.S. dollar on June 20, after Norway’s central bank signaled it may cut interest rates just as the U.S. Federal Reserve indicated it was preparing to scale back stimulus
“Norway is getting absolutely smashed like it’s an emerging market yet it’s the greatest currency on earth,” Bloom said in an interview on Bloomberg Television’s “Countdown” with Mark Barton and Anna Edwards. “We’d be selling euros and buying Norway. That’s a great currency but you can see the liquidity is quite difficult so that’s for the longer term.”
The krona strengthened 0.3 percent to 7.9281 per euro at 11:19 a.m. London time today, after depreciating to 8.0819 on June 24, the weakest level since December 2010. It advanced 0.2 percent against the dollar to 6.0963.
The krone is the least-traded of the Group of 10 developed-nation currencies, based on Bank for International Settlements data. It weakened last month after the Norges Bank predicted its benchmark rate would be 1.38 percent in the fourth quarter, versus an earlier forecast of 1.45 percent, dimming the allure of the currency.
Fed Chairman Ben S. Bernanke said a day before the Norges Bank’s announcement that U.S. policy makers may end asset purchases next year if the economy achieves the sustainable growth the central bank has sought since the last recession ended in 2009.
To contact the reporter on this story: Lucy Meakin in London at email@example.com.