EUR/NOK about sideways, slightly higher USD/NOK in 2022 – Nordea

After strengthening last year on the back of higher oil prices and rising stock markets, economists at Nordea believe the Norwegian krone will move broadly sideways in 2022. The caveat is that rising rates could give a bumpy ride in equity markets which will hurt NOK.

Sideways, but be prepared for a bumpy ride

“We believe the NOK will move broadly sideways in 2022. While we see EUR/NOK hovering around 10.00, we believe a stronger USD will lead to somewhat higher USD/NOK ahead (above 9.00). The caveat to our view is that rising rates could give a bumpy ride in equity markets which will hurt the NOK.”

“we expect that the main drivers for the NOK in 2022 will be petroleum prices and risk sentiment. Rate differentials will matter too but are unlikely to be a key driver this year. Instead, Norges Bank’s FX transactions on behalf of the Government will likely play a bigger role than the upcoming rate hikes from Norges Bank.”