EUR/NOK: Krone is not out of the woods yet, 2023 will be better – Nordea

Norges Bank just announced that they will reduce their NOK selling. However, Norges Bank NOK sales are only one factor that will influence the Norwegian Krone. More important are developments in global financial markets, according to economists at Nordea.

Norges Bank winds down NOK sales

“Norges Bank winds down their NOK selling to 1.9bn NOK per day until 16. December from 3.7bn NOK/day in November. This change should be good news for the NOK in the short-term but global financial market developments will be decisive for NOK’s path.”

“We remain in the camp that believes markets are too optimistic on inflation and too pessimistic on economic activity ahead – this is why we are not sure that the worst is over for the NOK yet. Our latest call is for EUR/NOK at 10.60 in 3M and we don’t see a need to make major changes to that forecast after today’s Norges Bank announcement.”

“Next year, we expect the development for the NOK to be better. We see EUR/NOK at 10.20 by mid-2023 and as low as 9.75 before end-2023.”