Norwegian krone and Swedish krona still supported - Natixis

Research Team at Natixis explain that the two Scandinavian currencies recovered in the face of a weaker US dollar in the first quarter of 2017 but only the Swedish krona managed to appreciate against the euro, as growth is stronger in Sweden than in Norway, whose economy is heavily dependent on the oil and gas sector.

Key Quotes

“The Norwegian krone therefore underperformed the Swedish krona after crude oil prices pulled back in March. The downturn in inflation in Norway has pushed back in time the prospect of a first interest hike by Norges Bank. Be that as it may, both currencies remain significantly undervalued in terms of their real effective exchange rate.”

“In coming months, we see both currencies appreciating against the backdrop of rising crude oil prices, leading to a steady rise in inflation in Sweden and stoking expectations of an interest hike by the Riksbank. Similarly, the stronger economic growth in Norway and the upturn in crude oil prices can be expected to bolster the Norwegian krone come the end of the year. We see the EUR/SEK pulling back towards 9.25 and the EUR/NOK towards 8.75 at the end of the year.”