Nordea On The Norges Bank FX Operations Move

In the wake of this morning’s announcement re: Norges Bank FX activity adjustments Nordea write “this was a much lower NOK selling level than we envisioned and a significant reduction vs. the two previous months.”

• “A large part of the adjustment is due to the turn of the new year and the Norges Bank now accounting for the government’s 2024 revenues, which will be lower than in 2023 (lower energy prices and increased government expenditure are eyed).”
• “This is great news for the NOK and points to better developments for the krone in 2024 vs. 2023.”
• “A significant fall in NOK sales is also good news from a psychological perspective as some foreign players had been negative on the NOK due to Norges Bank flows during 2023.”
• “The news, bundled with talk about interest rate cuts from the Fed and other central banks, and a still hawkish Norges Bank, is a combination that will give a much-needed tailwind to the NOK.”
• “We would not be surprised if EUR/NOK goes below NOK11.00 in the coming weeks. We see EUR/NOK trading close to NOK11.00 and USD/NOK around NOK10.00 in the months to come.”