Despite the high risk aversion, the Norwegian krone was able to appreciate in recent weeks. Economists at Commerzbank expect NOK to strengthen in the first half of the year until the European Central Bank (ECB) starts hiking rates in the fall.

Only moderate upside potential for NOK

“Thanks to the restrictive Norges Bank, the Norwegian krone should appreciate against the euro in the first half of the year. In the fall, however, when the ECB implements its first interest rate hikes, the upward trend is likely to stall.”

“Next year, the NOK could gain again some ground against the euro. Although the ECB is also likely to raise its key interest rate again, Norges Bank remains the comparatively more active central bank. In addition, the high oil prices should tend to support the NOK.”