Sweden, Norway currencies seen surging against euro, dollar in 2018 - Reuters poll

OSLO (Reuters) - The Swedish and Norwegian currencies are poised to rally against the euro over the next 12 months, despite underperforming expectations since July, a Reuters poll of economists found on Friday.

Swedish kronor, Norwegian kronor, and Danish kronor notes in various denominations are seen in this photo illustration taken in Stockholm February 2, 2011. REUTERS/Bob Strong

The two Nordic currencies will also extend their recent surge against the U.S. dollar even after sharply outperforming predictions during the third quarter, the survey showed.

While the Norwegian crown could receive a boost from rising oil prices, the country’s main export, its Swedish peer faces resurgent inflation and thus a growing possibility of an end to the central bank’s quantitative easing.

The Swedish crown appeared poised for the biggest moves in the next 12 months, according to the poll. It was forecast to gain 8.5 percent from current levels against the dollar and 4 percent against the euro.

The Norwegian crown was meanwhile expected to rise by 7.8 percent against the dollar and 3.8 percent against the euro over the same period.

Some analysts cautioned however that Nordic central banks are anxious to avoid a currency rally, and thus less likely to tighten monetary policy in the near term than either the U.S. Federal Reserve or the European Central Bank.

The re-appointment last week of Stefan Ingves, Sweden’s notably dovish central bank governor to a new five-year term, is among the reasons why the Riksbank should be expected to proceed with care, they argued.

“No change of Governor at Riksbanken in 2018 points towards continued expansionary monetary policy,” DNB Markets wrote in a note to clients.

And while Norwegian growth and inflation are expected to moderately increase, supporting the currency, the central bank’s plan to hold rates unchanged until the summer of 2019 is pushing the crown in the opposite direction.

The Norwegian crown was forecast to strengthen to 9.00 against the euro and 7.36 versus the dollar in the next 12 months from its current levels of 9.36 and 7.98 respectively.

The Swedish crown was expected to rise to 9.15 against the euro and 7.4290 versus the dollar during the next year from 9.53 and 8.12 currently.

Polling by Mumal Rathore and Vartika Sahu; Writing by Terje Solsvik; Editing by Hugh Lawson