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NORWAY: FX Transaction Changes Unlikely To Meaningfully Impact NOK

NORWAY
CEEMEABulletNorwayGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets

We would not expect the Norges Bank becoming a net buyer of NOK (vs a net seller previously) to have a meaningful impact on spot, other than via a psychological channel.

  • Previous research from Norges Bank indicates “little evidence that Norges Bank’s transactions over time have been a significant share of the market for NOK” (see here).
  • Intraday NOK outperformance has largely been a function of Brent crude's >2% rally on heightened geopolitical risks in the Middle East. NOKSEK is 0.3% higher today, on track for a sixth consecutive daily gain. The Aug 29 high at 0.9764 provides initial support. 

Figure 1: Estimated share ofNorges Bank’s FX transactions of the global turnover in the spot and forward market for NOK. Per cent. 14-day moving averages from January 2018 to September 2023 (Source: Norges Bank)

 

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We would not expect the Norges Bank becoming a net buyer of NOK (vs a net seller previously) to have a meaningful impact on spot, other than via a psychological channel.

  • Previous research from Norges Bank indicates “little evidence that Norges Bank’s transactions over time have been a significant share of the market for NOK” (see here).
  • Intraday NOK outperformance has largely been a function of Brent crude's >2% rally on heightened geopolitical risks in the Middle East. NOKSEK is 0.3% higher today, on track for a sixth consecutive daily gain. The Aug 29 high at 0.9764 provides initial support. 

Figure 1: Estimated share ofNorges Bank’s FX transactions of the global turnover in the spot and forward market for NOK. Per cent. 14-day moving averages from January 2018 to September 2023 (Source: Norges Bank)