Denmark Gold
You would have made 14-20% on investment in Norwegian Kroners so far this year – A follow-up from my articles in March
Norwegian Kroner – A Currency trusted by international Investors at the moment
I wrote about the Norwegian Kroner in March this year, and prognosed it as the safest Currency to invest into.
Most experts agree today that as a long-term investment, the Norwegian Kroner will be strong due to the Norwegian Economy looks strong and that the Norwegian Central Bank as the Australian Central Bank has done, will increase the interest rate in near future.
The Norwegian Krone (NOK) will probably be one of the most interesting Currency to invest towards into unforeseeable future.
Expectations of an interest increase from the Norwegian Central Bank, as the Austrailian authorities did this week is a signal that the Norwegian Economy is promising and that it will maintain this position for a longer time. It is expected that the Norwegian Central Bank will increase the interest rate at the next interest meeting in October 28th 2009.
So far this year, the NOK has strengthened with 14 percent towards the Euro and around 18 percent towards the US Dollar..
The NOK has even strengthened its position against the British Pound Sterling as well which is the strongest position the NOK has had towards this currency since the start of 1980’s
Experts expect the NOK to strengthen further and do not see any signals of weakening of this currency towards any key currencies in near future.
However, the flip side of this is that the NOK will be too strong and this may cause a problem for the export oriented business and the trade balance for Norway. The Central Bank of Norway wants to normalize the interest level, however need to balance this towards international economic development and its trade balance.
It is expected that if the interest rate will be increased in October, it will make the NOK to rise even stronger towards especially US Dollar and Euro. It is also expected that if this happens, the Central Bank of Norway will not put forward any new interest increase before earliest in February 2010.
It is expected that the NOK will strengthen further with around 10% towards Euro and US. Anything stronger than this will make it very difficult for the Norwegian authorities to support the export based industry in Norway. Last year when the NOK strengthened itself lots of traders hedged against a Norwegian Kroner that would grow even stronger, but this did not happen as the Norwegian authorities saw the signals their export based industry faced.
Another article I wrote in March 2009 about NOK and its role in the international currency market.
Major Import Partners to Norway are the EU countries with 62.5% share of which Sweden has 14.7%, Germany 11.9%, UK 8.1% and Denmark with 6.4%. The US share of Norwegian imports is 8.2% of Norway’s total import and Japan with 5.2%.
The major Export Partners for Norway are the EU countries with 76.8% of which Netherlands takes 11.4%, Germany 10.3%, France 10.0% and Sweden 8.4%. The US makes up 7.6% of Norway’s export destination.
This means that the NOK is very dependent upon its strength towards the Euro as its trade balance is very dependent upon this relation.
It is less sensitive towards Japanese Yen, Chinese Yuan and Russian Rubles as well as Brazilian currency.
It is expected that the NOK will strengthen at least 10% towards the Euro and USD to bring it back to the level it was before the recession started in 3rd quarter of 2008.
This will also be the case towards other currencies like the Japanese and Chinese. The NOK is at the moment lower than the level in 3rd quarter versus Russian Ruble, which also can be taken as a signal for how bad the Russian economy is at the moment.
We might use this indicator together with the strength of Russian Ruble towards the Euro to judge for how the Russian Ruble will develop in the medium to long term perspective.
PS! Do not forget my advise as of March about the Gold as well. At the time of my advise it was at 730 USD/Oz and today it trades at 1040 USD/Oz and signals are it should go as high as around 2500 USD/ Oz within 1 year.
Signals of this are fear of inflation in major economies, unsecure stock exchange, internation trade in-balances.
About the Author
He has a background as civil engineer and geoscientist. He has worked mainly within the oil and gas industry from the mid 1980s. He has written a few fictional novels as well as being the author of some professional litterature within oil and gas sector, he is now an editor of some web sites.
WWC 2011 – All Events Gold Medalist (MAI GINGE JENSEN – Denmark)
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