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Hardy: NOK will fall further due to economic complacency

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The Norwegian krone is still down after the country’s central bank cut its growth forecast. It also warned the economy was at risk of a 10 percent fall in energy investment. Although it caught many by surprise, Saxo’s John Hardy says it was a strong statement because the country faces turbulent times.  
Hardy believes the Norwegian kroner (NOK) will weaken further. EURNOK is currently trading around the 8.35 area but he thinks it will hit 8.5, perhaps more.
 
You might think that because Norway’s economy is built on oil and oil prices are currently high, this would work in the country’s favour. Hardy points out that if companies are about to reduce investment it will affect the Norwegian economy much more than the rise or fall in the export price.
So what does this mean for a nation where every Norwegian is, in theory, a millionaire because of its sovereign wealth fund? Hardy says the country has a problem with ‘Dutch disease’, or the curse of oil, which has led to a sense of economic complacency. If you look at wages, he says, Norway is not a competitive economy. He also believes that low interest rates have created a housing bubble.