SEB sees stronger Swedish, Norwegian currencies ahead

The recent hard sell-off of some of the more sound and attractive currencies such as the Swedish krona and Norwegian krone following the intensification of the sovereign debt crisis has produced interesting opportunities for longer-term investors.

In a new report SEB’s experts say that while tightening of fiscal policies will likely weigh on growth in the developed world for several years, emerging market economies are likely to continue expanding rapidly. Furthermore, central banks can leave rates low for a long time as inflation remains a remote threat to global economic recovery.

“The biggest danger to our projected economic turnaround scenario is continued uncertainty over how markets and politics will interact. The regulatory and political landscape in which markets now operate is uncertain,” says Carl Hammer, chief foreign exchange strategist at SEB.

He adds that still, a coherent and strong message from world leaders on how to resolve this mistrust should enable markets to refocus once again on economic positives with a consequent improvement in risk appetite.