The Norwegian Krone has had a horrible start to 2023. A lower interest rate differential has hurt the NOK and economists at Nordea expect EUR/NOK to trade sideways in the near-term.

NOK gets knocked down as rate differentials dwindle

“The combination of lower energy prices and dwindling interest rate differentials are the key reasons behind the NOK’s decline.”

“While the ECB will be the central bank to hike the most in the coming months, Norges Bank could have a few surprises in its sleeve. The Norwegian economy has fared better than feared, wage growth has been higher than expected, and the NOK is weaker than Norges Bank pencilled in. This argues for higher rates than previously signalled. That said, all stars need to be aligned for the NOK to perform and we believe EUR/NOK will move about sideways in the short-term.”