Norwegian Krone Tipped to Extend Its Purple Patch

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The Norwegian Krone recorded a gain against all its G10 rivals in the third quarter, and one market analyst looks for that outperformance to continue.

"Norway's crown, a leading G-10 currency in 2025, posted a strong Q3 and is poised to continue its rally against the euro," says Peter Stoneham, a market analyst at Reuters.

The Norwegian krone and Swedish krona were the top performers among the ten most heavily traded currencies in the previous quarter, advancing 14% and 12%, respectively, against the USD.

The call comes amidst growing anxiety over the U.S. government shutdown, that sees the dollar start the new quarter on the backfoot. The Scandinavian currencies of NOK and SEK have shown a tendency to ignore such shutdowns, casting them as potential hedges.

"October kicks off with the perennial drama of a U.S. government shutdown. Yet, for the Norwegian crown (NOK), this event is unlikely to be a significant mover. Past shutdowns have barely registered on the NOK, and given the currency's strong underlying momentum through 2025, it's well-positioned to remain largely unaffected once again," says Stoneham.

According to Stoneham, the NOK's attractiveness rests to a significant degree on Norway's solid fundamentals and relatively high interest rates, which tend to attract the inflow of foreign capital as investors seek out greater returns than might be on offer elsewhere.

This is known as 'carry'.

"Despite September's 25-basis point Norges Bank rate cut and potential for another cut before the year is out, the NOK still enjoys a healthy carry advantage. The latest central bank's Regional Network Survey was fairly neutral but with some hawkish vibes," explains Stoneham.

"The economic backdrop is positive and market analysts are looking beyond one last rate cut, preferring to focus on the shift to a shallow tightening cycle and the benefit to the NOK," he adds.

Looking ahead, the Krone can continue to outperform. For technical punters, Stoneham has the following to say about the EUR/NOK outlook:

"In the EUR/NOK pairing, the monthly chart displays a shallow 30-month bearish trend, with the euro declining 4.6% from its May 2023 peak of 12.2030. Throughout this period, the currency pair has remained confined to a trading range between 11.0990 and 12.2220. Recent three-month price action shows the NOK gaining momentum, suggesting a potential EUR/NOK downside breakout from the established range may be imminent."