The Norwegian krone has significantly rebounded against the US dollar, trading at 10.52 kroner per dollar on Tuesday, a notable improvement from 11.47 kroner in January. This recovery is attributed to a weakening dollar due to US economic uncertainty and fears of a potential tariff war between Europe and the US, which has bolstered the krone against both the dollar and the euro.
Economists suggest that Norway's perceived resilience to tariffs makes the krone appealing to investors from Singapore, Dubai, and Tokyo. Additionally, higher inflation figures have led to forecasts of a steeper interest rate path, potentially delaying a planned interest rate cut in March and anticipating multiple cuts in 2025. This scenario enhances the krone's attractiveness by offering higher interest rates for a sustained period.
Bank HSBC has projected a recovery for the krone against the euro and the US dollar, citing a shift in the balance of risks. Other analysts also foresee the krone strengthening against the dollar in the medium to long term.