Economists at Danske Bank still believe in a stronger Norwegian krone over the coming year and despite near-term global risks, they forecast EUR/NOK at 10.30 in six-to-twelve months.
Key quotes
“We still believe in a stronger NOK over the coming year but emphasise that much of this is down to our view on the global economy. We also believe the domestic story is turning supportive of a stronger NOK, as Norges Bank has substantial amounts of NOK left to buy this year because the economic outlook looks better than those of peers and Norges Bank could hike rates faster than priced in markets.”
“We roll our forecast profile and now project EUR/NOK at 10.50 in one month (from 10.60), 10.40 in three months (unchanged), 10.30 in six months (10.40) and 10.30 in twelve months (unchanged).”
“The biggest risk factors to our forecasts lie in the global recovery, risk appetite, oil prices and vaccine developments – all of which are interconnected. Better news than in our baseline would drive a reflationary global investment environment underpinning a sharp NOK comeback. On the other hand, a troubled reopening could result in a sharper setback.”
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