NOK should appreciate moderately against the Euro – Commerzbank

Norges Bank’s policy rate will depend a lot on the Krone’s development over the coming weeks and months. Antje Praefcke, FX Analyst at Commerzbank, expects NOK to gain some ground against the EUR.

Norges Bank will do more in case of a weak Krone

“If the Krone were to develop weaker than expected, the key rate might have to be hiked even more, according to Norges Bank. If, on the other hand, inflation falls faster or unemployment rises more than projected, the policy rate may be lower than projected.”

“As Norges Bank signalled further rate hikes if NOK were to remain weak, to my mind the logical consequence is that it should not depreciate further.”

“Principally I am of the view that NOK is trading at overly weak levels anyway. As a result, and in particular as there is the prospect of the rate differential to the Eurozone narrowing further, NOK should appreciate moderately against the Euro.”