EUR/NOK: Krone remains fundamentally undervalued – Lloyds Bank
|According to a longer-term perspective of analysts at Lloyds Bank, the krone remains fundamentally undervalued and they look for EUR/NOK to ease towards 8.50 by the end of the year.
Key Quotes
“Since hitting an 18-month high against the euro in mid-February, the Norwegian krone has been on the back foot in recent weeks, pushing EUR/NOK back above 9.15. The move has occurred against a softer oil price backdrop and a shift lower in interest rate expectations. Front-month Brent crude dropped from a high around $57/bbl at the start of March, to around $50/bbl, although following the US missile strike on Syria, it has recovered back above $55/bbl.”
“Near term, the prospect of further consolidation in the oil price and a relatively stable risk environment should offer some support to the krone. Over the coming quarters a recovery in investment is likely to lead to faster GDP growth and consequently a fading in expectations of a loosening in monetary policy. From a longer-term perspective, we believe the krone remains fundamentally undervalued and look for EUR/NOK to ease towards 8.50 by the end of the year.”
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