Multi Currency Assets in Norwegian Bonds

by | May 13, 2008 | Multi Currency Investing

Multi Currency Assets in Norwegian Bonds

Multi Currency assets were outlined in a message entitled Multi Currency Investing for 40 Years.

Included in that message was this question from a Multi Currency subscriber”

“Gary, I wish to hold cash outside of the us dollar. I am now holding euros; however I expect the euro to lose against the us dollar. So I will convert from euro to something else. But what will appreciate against both euros and dollars? I am considering the Norway krona due to their oil and well funded pension system. Have you considered the Norway currency? What have been your most recent thoughts on Norway currency? I love hearing your thoughts on currencies.”

A partial answer to this question in the “40 Years” message included the currency multi currency breakdown of my personal portfolio.  See this multi currency breakdown at Multi Currency Investing for 40 Years

I am thinking of adding some Norwegian kroner as I reduce my euro position because:

The good points about holding Norwegian kroner are:

#1: High interest rates
#2: Weaker global growth
#3: Continued turmoil in the financial
#4: Indications of slowdown in the
Norwegian housing market

There are some risk pressures though. They include:

#1: Sustained strong domestic growth
#2: Mounting inflationary pressure
#3: High capacity utilisation and
continued tight labour market

I am planning to reduce my euro position as bonds mature and may well add some Norwegian kroner bonds. One reason to do so is they  pay higher interest than euro and dollar denominated bonds.

Compare the yields for example of similar dated bonds denominated in dollars and euro at  this time:

NOK           5.5      15/05/2009      NORWEGIAN GOV’T     5.34%
EUR           3.7      15/01/2009      DEPFA PFANDBRIEF    4.30%
USD           6.6      15/11/2010      FANNIE MAE                 2.87%

See the role that Norwegian bonds can play in a multi currency portfolio in much greater detail, plus a list of Norwegian kroner bonds if you are a Multi Currency portfolio course subscriber

If you are not a subscriber see Multi Currency Portfolios Course.


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