The crown can be even stronger – HegnarOnline

The krone depreciated sharply early last autumn to March this year, but much of this was reversed from mid-March to mid-May, and now believes the chief economist Shaked Syed in Sparebank 1 Markets that the crown may strengthen further. After initially a little weakness.

– This strengthening has been in line with our forecast and our currency models, although it has risen somewhat faster than we had envisaged, he writes in a recent analysis today.

See also: Has the dollar peaked?

Oil and rate
Syed believes that the reasons for the stronger krone higher oil prices and increased interest rate differential abroad.

As late as March 16 this year cost a dollar on mostly 8.42 million, while a euro at most 19 March this year was $ 8.93 million.

Today courses respectively 7,7- and 8.4 million and Syed now seeing that the krone will appreciate further on 3-12 month term, albeit only in moderate proportions against the euro.

Syed has an estimate that indicates that a dollar will cost 6.9 million in 12 months. At the same time he believes that the crown will only strengthen to 8.25 dollars for a euro a year.

This is because Syed think the dollar will depreciate against the euro managed early in 2016. Syed estimates that the dollar will weaken from the current $ 1.12 for a euro to 1.2 dollars a year on improvement in the euro zone.

Also read: The dollar may be a penny cheaper

Better in Europe?
– I think the ECB will see clear signs of recovery in the eurozone economy and signal that this provides a basis for taking down some of the stimulus, says Syed Finansavisen today.

– If it happens, it is a far greater event than the Fed probably raises interest rates later this year. It is after all already waited. The krone is weak, both measured by purchasing power parities and from the interest rate differential and the oil price, says Syed.

Both methods indicate that the rate should have been around 3 percent stronger, Finance writes newspaper.

So what does this stronger krone will for Norges Bank and setting interest?

– A strong dollar is – ceteris paribus – an argument for interest rate cuts from Norges Bank. This is one of several reasons why we believe the central bank will reduce its key interest rate at the next monetary policy meeting on June 18th, but we do not think of more interest rate cuts then, says Syed – with a proviso.

– If the crown however should strengthen markedly further, we can not disregard in from another interest rate cut. This applies more if a stronger krone will be driven by increased interest rate differential abroad than by oil prices, he added.

Here was Shakeb Syed was guest in HegnarTV

Norges Bank has its next monetary policy meeting on 18. June.