Norway: A Diamond in the Rough?

Currency Expert and Editor of The Currency Capitalist and the free daily FX University Daily, Chuck Butler, shares his thoughts on one of the real gems in the world of paper money…

“Long-time readers know my affection for the surplus/positive balance of payment countries and their respective currencies. Well, Norway always drifts to the top of those discussions because of their impressive balance sheets.”

“But then last night I came across a report by the research team at HSBC that graded the currencies. Their pick for best currency? Norwegian krone!”

“Let’s listen in to what the HSBC researchers are saying…

“”The world is in total flux and, as such, we have released our new interim forecasts for the global economy today. Based on these numbers, which make depressing reading, we look at who comes out the best amongst the G10. We give all the variables an equal weight.”

“”We could have quite easily given CDS spreads a higher weight, which we believe is a key driver of the FX market at the present time, but even with equal weights the answer is still the same – Norway wins hands down.”

“In addition, the Japanese yen and the Swiss franc are both losing their safe haven status and the best safe haven currency is the Norwegian krone. The Norwegian krone is our preferred G10 currency where we expect a sustained appreciation over the next 18 months.”

“So, my colors are already pinned to Norway’s mast. This is simply a choice based on the country’s excellent fundamentals and booming surplus. It has been, and will continue to be, until something changes.”

“By the way, I first wrote about the surplus countries being at the top of my currency list way back in 2006. And I wrote about how surplus countries looked to withstand this credit crunch back in October in my monthly newsletter, Currency Capitalist.”

“And which surplus country did I mention both times? Norway!”

“Here’s a snippet of what I told my Currency Capitalist members six months ago…”

“”Norway, with their North Sea Oil, has a very healthy balance sheet. In fact, it’s so healthy that policymakers are creating one of the most enviable pension plans on earth. They actually have enough money in this mega-pension fund to guarantee every citizen receives a pension – including the next generation of Norwegians who aren’t even born yet!”

“”Norway’s Central Bank…now takes their place among the world’s most influential central bankers and provides price stability and effectively fights inflation.””

“Looking back today, a currency like the krone really needs the euro to be underpinned for the krone to outperform the single unit. So, all I’m really saying here is that the dollar isn’t the “Best Looker” in the currency world right now. That claim to fame belongs to the Norwegian krone.”

Source: Currency Capitalist

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