EUR/NOK: Krone remains fundamentally undervalued – Lloyds Bank

Sandeep Kanihama FXStreet Contributor

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.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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