NOK Poised for Further Strength Against SEK, Says Rabobank

Key Moments

Monetary Policy Divergence Drives NOK/SEK Higher

Rabobank’s FX Strategy team reports that NOK/SEK has climbed roughly 11% so far this year, attributing the move to a more hawkish stance from Norway’s central bank compared with the unchanged policy in Sweden.

They point to Norway’s status as an energy exporter and ongoing inflation pressures as important factors underpinning the Norwegian Krone’s performance against the Swedish Krona.

Norges Bank Turns Hawkish as Riksbank Holds Steady

The bank underscores that the Norwegian central bank’s policy tone has shifted notably over recent months.

“At the same time, the Norges Bank swung from a dovish tone at the end of last year to a more hawkish stance based on domestically driven sticky inflationary pressure.”

“This triggered a Norges Bank rate hike last week on the same day that the Riksbank maintained steady policy.”

Inflation Dynamics in Norway and Sweden

Rabobank contrasts the inflation backdrop in the two economies, noting differing sources of price pressures.

“While fiscal policy will help support consumption in Sweden and potentially lift underlying inflation pressures, sticky inflation has been a theme in Norway for a while.”

Rabobank’s NOK/SEK Trading View

With NOK/SEK already up significantly this year, the bank still sees room for additional gains.

“In the year to date, NOK/SEK has risen around 11%, and we see the potential for further upside in the months ahead.”

“We favour buying NOK/SEK on dips and look for a move towards the 1.02 level on a 3-month view.”

Summary of Rabobank’s NOK/SEK Outlook