Stable Scandinavia: Nordic currencies going for absolute gold. We get the inside view
Following a Bloomberg report that singled out Nordic currencies as ones to watch this year, FinanceFeeds took a look within.
Scandinavia is renowned for high quality.
All of the Nordic nations offer an absolutely top drawer quality of life and standard of living, and are home to many companies which export high quality products that are at the very top of their game.
Style, quality, security and amicability are Scandinavian virtues. Their economies are at the very forefront of global stability. Their populations are highly educated, calm, considered and sophisticated. Their lifestyles enviable, and their safety nets unrivalled worldwide.
Why, in that case, are their currencies not in extremely high demand among institutional and retail traders?
Given that the Scandinavian countries have all eschewed the Euro, they retain their own well protected financial markets economy, and are among the wealthiest, most modern and socially advanced nations in the world.
Now, the age of the Nordic currencies has begun.
As last week drew to a close, Norway’s krone was reported to have taken an early lead in this year’s battle to be the world’s best-performing major currency, as a blistering rally that catapulted its neighbor to the top spot in 2020 begins to fade.
Bloomberg’s analysis was that it had been bolstered by a nascent global economic recovery and the prospect of a hawkish shift by the central bank, therefore the Norwegian currency looked set to gain around 2% against the euro through December last year, according to the median estimate of analysts in a Bloomberg survey.
That’s the most among Group-of-10 peers, beating the projected advance for Sweden’s krona, which took a considerable hit last week amid speculation that the central bank was moving to cap the currency’s strength after it climbed almost 5% last year.
Sweden’s economy is absolutely thriving. The country did not lock its people or businesses down, and there is no sign of any fear, coercion or government fueled destruction of society or commerce. The entire country is free, smiling and operating at its normal capacity.
As the Norwegian krone rallied, Sweden’s krona dropped to the bottom of the table among its peers. It’s fallen around 0.7% this year, weighed down by the Riksbank’s decision this week to revamp its foreign reserves, according to Bloomberg. While the central bank says a plan to start selling the currency isn’t motivated by any monetary policy objective, the move ignited bets it may use the new setup to cap krona gains to revive inflation.
That fits with mounting concerns among policy makers worldwide about currency strength hurting the economic revival. Yet for their part, investors are not worried about the krone’s recent strength for now, given it’s only just recovering from its biggest slide in four years.
FinanceFeeds was in Sweden last week, and saw considerable attraction from other nations which have been subjected to lockdowns as people and business look to free and democratic Sweden for a good future.
Today, in order to gain a view from within on the movements of Nordic currencies being referred to in Bloomberg’s report, FinanceFeeds spoke to Arif Alexander Ahmad, CEO of Scandinavian Capital Markets, a specialist FX brokerage in Stockholm which operates a unique model in meeting all of its clients personally, and inviting them to Sweden in what it calls the Valhalla initiative, to learn what its clients want and tailor a service that suits their specific needs.
Mr Ahmad explained to FinanceFeeds today “I think the Scandinavian countries, specifically Norway and Sweden, have a very good outlook for 2021. The Swedish krona has already recovered from the 11 year lows against the Euro this March, and I believe Norway has the potential to do even better as a rebound in crude oil, its main export, will help the Norwegian krona rise even further this year.”
At our meeting last week, Mr Ahmad was extremely confident that Sweden, along with its neighbors, are countries of strength, and offer the combination of pragmatic freedom with responsibility, therefore allowing FX brokerages to grow without having their wings clipped by anti-business regulators whilst benefitting from being in the most transparent, highest quality region for business in the world.
Certainly investors are now beginning to look beyond the propaganda relating to endless Covid19 market bilge. Scandinavia is free from all of that.
As a result, while the Swedish krona enjoyed the tailwinds of its central bank keeping rates on hold as others slashed borrowing costs to prop up their economies, commodity-linked currencies are now coming back into vogue as the world recovers.