Affiliation:
1. Department of Industrial Economics and Technology Management, Faculty of Economics, Norwegian University of Science and Technology (NTNU), Alfred Getz v. 3, 7034 Trondheim, Norway
2. SpareBank 1 Markets, 7004 Trondheim, Norway
Abstract
Global energy production is undergoing a transition from fossils to renewables. At the same time, the Norwegian Oil Fund has grown exponentially in size and is now a major global investor. These events in combination are likely to impact the dynamics of the Norwegian krone. Concurrently, the persistent weakening of the Norwegian krone (NOK), hitting record low exchange rates against the major currencies, is sparking national and international interest. Using updated data, we find that oil prices and global asset prices are both important drivers of EURNOK returns. However, we find that the relative importance changed following the 2015 oil price decline, whereafter asset prices became more significant. Furthermore, we observe an impact of investor risk aversion, suggesting that the krone is no longer a safe-haven currency.
Subject
Finance,Economics and Econometrics,Accounting,Business, Management and Accounting (miscellaneous)