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Investing.com - Bank of America projects a strengthening Norwegian krone against the euro, forecasting EUR/NOK at 11.30 by year-end following Norges Bank’s recent policy rate cut.
The Norwegian central bank’s decision surprised some analysts but was considered hawkish relative to market expectations, with Norges Bank projecting approximately one rate cut per year over the next three years. This measured approach contrasts with the more aggressive easing cycles anticipated from other central banks.
BofA cites Norway’s "highly resilient economy, particularly by European standards" as a key factor supporting the krone’s expected appreciation.
The bank also forecasts USD/NOK reaching 9.42 by year-end, predicting a softer U.S. dollar with EUR/USD potentially reaching 1.20 in the same timeframe.
Additional factors supporting BofA’s bullish NOK outlook include "lower bar for upside European surprises, especially on the fiscal front" and higher economic growth in Norway compared to the Euro area. The bank also notes the relatively hawkish stance of Norges Bank versus the European Central Bank when compared to market expectations.
From a positioning perspective, BofA’s analysis indicates that asset managers currently have "ample room to buy NOK," suggesting potential for increased institutional demand for the Norwegian currency.
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