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Economists at Danske Bank pencil in a modestly stronger Norwegian krone in 2021 and forecast the EUR/NOK pair at 10.20 in 12 months. 

Key quotes

“We pencil in a modestly stronger NOK in 2021 on the back of global reflation extending on coronavirus vaccine rollouts, relative growth and rates and seasonal aspects.” 

“We underline that given the current levels of the terms of trade, the broad USD and unit labour costs we do not see any valuation arguments for a much stronger NOK.” 

“On the back of the recent strong NOK performance, we lower our EUR/NOK profile and now forecast the cross at 10.40 in one month (previously 10.80), 10.30 in three months (10.60), 10.20 in six months (10.50) and 10.20 in 12 motnhs (10.40).” 

“The biggest risk to our call is global reflation. If it proves more forceful, we could see EUR/NOK move significantly below 10.00 in the coming years. If, however, the COVID-19 crisis turns into a lengthy economic crisis, EUR/NOK could return to 11.00.”