EUR/NOK to come above 12 as Krone will weaken further until the summer – Nordea
Economists at Nordea answer some questions that keep reappearing when discussing the Norwegian Krone and Norges Bank.
At what level will Norges Bank intervene?
“If EUR/NOK rises from 12 to 14 over the duration of a month no intervention will come, but if EUR/NOK rises from 12 to 14 in one day, then it is likely that Norges Bank will step in.”
What is most likely to happen with the NOK after Norges Bank’s May meeting?
“We believe that talk and speculation of a 50 bps rate hike from Norges Bank this week could leave some participants wrong-footed. If Norges Bank hikes by 25 bps, as we expect, the NOK will likely weaken further.”
What is Nordea’s base case for the NOK?
“We expect the NOK to weaken further until the summer, with EUR/NOK coming above 12. However, after the summer, the NOK sales will be wound down and most central banks will pause their rate hikes. We see a lower EUR/NOK towards year-end, closer to 11.00, but the NOK will likely remain weak in a historic context for some time.”
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FXStreet Insights Team
FXStreet
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