Norwegian Krone Expected to Rise Further Against Euro - Rabobank

Jane Foley, Senior FX Strategist at Rabobank, stated that the Norwegian Krone is the strongest-performing G10 currency across multiple timeframes, supported by oil prices, above-target inflation, and a hawkish Norges Bank. As Europe's largest energy exporter, Norway's export revenues and domestic demand resilience provide additional support for the Krone.

**Near-term targets revised lower, but path not linear**

Foley has lowered the 3-month EUR/NOK target to 10.80 from previous levels, with a 12-month outlook near 10.50. However, she also cautioned that within a 1-3 month timeframe, the exchange rate could still see range-bound trading around 11.00 before gaining fresh downward momentum on a 6-month view. This implies near-term volatility may persist, but the medium-term direction leans lower.

**Oil prices and central bank stance provide dual support**

Market reports indicate that if Brent crude oil prices rise into the $80-85 per barrel range, increased petroleum tax revenues and Norwegian Krone purchases would further support the currency. Meanwhile, Norges Bank raised its key rate by 25 basis points to 4.5% in December, and the divergence between its hawkish stance and eurozone policy expectations provides yield differential support for the Krone. Analysts suggest the EUR/NOK rate could retreat toward 11.00 by month-end.

**Risks lie in energy price and risk appetite fluctuations**

Despite strong fundamentals, the Norwegian Krone, as a commodity currency, remains sensitive to global risk sentiment and oil price swings. Should energy prices retreat or market risk aversion intensify, the EUR/NOK downtrend could be delayed. Rabobank's assessment is based on a gradual decline assumption rather than a sharp near-term drop.