Investing.com -- Bank of America (BofA) analysts maintained a positive outlook on Scandinavian currencies, commonly referred to as the Scandies, against the euro.
BofA forecasts a year-end target for EUR/USD at 1.17, while expecting the EUR/SEK (Swedish krona) to reach 10.40, translating to a USD/SEK rate of 8.89. Similarly, the EUR/NOK (Norwegian krone) is projected to hit 11.00, with the USD/NOK expected at 9.40 by year-end.
The firm expresses a preference for the Swedish krona over the Norwegian krone in the near term, yet anticipates the NOK-SEK exchange rate to recover to 0.96 later in the year. This optimism is partly due to the European fiscal push and the euro’s improved profile, which are likely to bolster both currencies.
Furthermore, a continued rotation into domestic assets and a significant increase in equity hedging ratios by local asset managers are expected to support the Swedish krona in particular.
BofA also points out that both the Swedish krona and the Norwegian krone should gain from relative monetary policy and anticipated faster economic growth this year. The positioning in these currencies remains light, especially among Real Money investors, suggesting potential room for appreciation as market participation increases.
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