Norway: Looking for buying NOK but not for now – Danske Bank

Norges Bank delivers an emergency rate cut to 0.25%. Strategists at Danske Bank like to look for buying NOK but stay on the sidelines for the moment. EUR/NOK trades at 11.621.

Key quotes

“This morning Norges Bank announced an emergency 75bp rate cut, sending the sight deposit rate from 1.00% to 0.25%.”

“Norges Bank argues that the reasons for cutting rates only one week after the latest emergency cut are that the development in Norway has continued to worsen, with a sharp rise in lay-offs , the negative impact of the global economy has intensified and oil prices are lower.”

“We believe the bar for another rate cut is high and we more or less rule out the possibility of negative rates.”

“NOK FX weakened on the initial announcement but later strengthened on the global risk picture.”

“We increasingly like to look for buying NOK. However, we opt to stay on the sidelines for now.”