EUR/NOK: Krone to remain supported by the higher price of oil – MUFG

During February the krone strengthened against the euro from 10.006 to 9.90. Economists at MUFG Bank expect the elevated price of oil to encourage stronger NOK unless triggers sharper global slowdown.

Norges Bank is leading way in tightening policy

“Our oil analyst expects the price of Brent to average $96/barrel in 2022 up significantly from $71 in 2021. It should encourage a stronger krone in the year ahead. 

“The main downside risk is that the higher price of oil eventually triggers a sharper global slowdown and deeper risk asset correction that weighs on the krone.” 

The Norges Bank is still expected to raise rates by 25bps on a quarterly basis going forward in the year ahead with the next hike on track to be delivered in March.”

“We expect the krone and Norway’s economy to remain supported by the higher price of oil.”