EUR/NOK: Resilient NOK – Nordea

The NOK has weakened for sure, but in fact, economists at Nordea are surprised it hasn’t weakened even more given last week’s sell-off in equities. The EUR/NOK pair is currently trading at 10.432.

Key quotes

“EUR/NOK was up 3.1% during the first Corona sell-off in equities in January of 2.5%. Furthermore, a 6% drop in equities last July prompted a 4% rally in EUR/NOK. So 12% in equities this week and 4% in EUR/NOK is far from a disaster, relatively speaking.”

“Our positioning may give a clue of why the NOK hasn’t weakened even more. The market was probably short NOK going into the Corona sell-off, and this might have limited the effect from lower equities (although we acknowledge that 4% is still a decent move… By all means).”

“Positioning won’t prevent the NOK from weakening further if the situation escalates, (as the past week has proved), but it suggests that the NOK could gain rapidly if we see some containment.”