The Norwegian crown is the worst-performing G10 currency so far in 2023, hurt by turmoil in the banking sector and a slowdown in central bank rate hikes just as U.S. and European peers raised theirs aggressively, but it may be due a respite.
It has weakened a whopping 10% against the euro this year, adding to a 5% tumble in 2022 as the crown failed to gain traction from a surge in oil and gas revenue last year. Norwegian benchmark interest rates currently stand at 3.0%, compared with 5% in the United States and 3.0% in the euro zone, where the European Central Bank started raising interest rates only in July.
According to a Reuters poll of foreign exchange strategists, the crown will likely rise 6.5% versus the euro within a year, and almost 10% against the U.S. dollar. “NOK should have been a lot stronger last year if its moves reflected the terms of trade,” Nomura’s Jordan Rochester said.