NOK outperformance to die out as central banks play catch-up

While the Norwegian krone usually struggles in times of increased market volatility, the recent risk-off mood in markets due to the war in Ukraine and the following spike in commodity prices helped the krone to outperform, even against safe haven currencies, with USDNOK dropping to November 2021 levels in March despite rising US rates and a broadly stronger dollar. Meanwhile, EURNOK, which is less affected by US rates, is currently trading near its lowest levels since 2018. We expect the Norwegian krone has room to strengthen further in the near-term if risk sentiment improves while energy prices remain high, however, over the medium term, narrowing monetary policy divergences will likely cap NOK gains as even the more dovish central banks like the European Central Bank and the Riksbank have now moved to signal tighter policy.

Read our latest NOK Update here:

DOWNLOAD THE FULL REPORT

Author: Ima Sammani, FX Market Analyst

Disclaimer

This information has been prepared by Monex Europe Limited, an execution-only service provider. The material is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is, or should be considered to be, financial, investment or other advice on which reliance should be placed. No representation or warranty is given as to the accuracy or completeness of this information. No opinion given in the material constitutes a recommendation by Monex Europe Limited or the author that any particular transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, it is not subject to any prohibition on dealing ahead of the dissemination of investment research and as such is considered to be a marketing communication.