The outlook stays for the Norwegian krone to strengthen over the medium- to longer-term towards the euro and buck, in response to analysts at Wells Fargo. They warn Norges Financial institution might be the primary amongst G10 to hike curiosity rates.
“Our outlook stays for the Norwegian financial restoration to collect momentum this 12 months as progress is made on a vaccine entrance, oil costs stay elevated and the adverse results from COVID dissipate. We search for actual GDP to develop 3.6% in 2021, adopted by 2.7% development subsequent 12 months. Though not our base case, we acknowledge that there might be some draw back threat to our forecast, characterised by an accelerated unfold of the virus weighing on financial output, any points with the vaccine distribution or a plunge in oil costs, just like that seen final 12 months.”
“On the flip aspect, we may see the tempo of Norwegian krone appreciation quicken as fee hikes might be supportive of the krone if different central banks stay on maintain, and as vaccinations turn into extra extensively out there.”
“We anticipate the Norwegian forex to profit as the worldwide financial system additionally recovers and vaccination availability will increase, along with broader U.S. greenback softness. General, we search for the EUR/NOK trade fee to succeed in NOK10.1500 by Q2-2022.”