Krone Favorite as Plunge Leaves Norway ‘Undervalued’

July 27 (Bloomberg) — The Norwegian krone, the third-worst performer against the euro since mid-2008, has become currency strategists’ favorite bet.

Buying kroner versus euros will return more in the next year than all 48 other foreign-exchange trades tracked by global investment banks, according to median predictions in Bloomberg analyst surveys. Norway’s currency will rise 9 percent by June to 8.2 per euro, from 8.8680 on July 24, the median of 19 forecasts shows. The krone is “hugely undervalued” after falling 11 percent since June 30, 2008, Citigroup Inc. said.

“The krone is due for a good bounce,” said Peter Lucas, who helps manage about $199 billion at RBC Wealth Management in Jersey, Channel Islands. “In an environment of rising commodity prices and moderate risk appetite, the krone will be one of the strongest currencies in the world,” probably strengthening to below 8 per euro within “months,” he said.

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