Blog
On the development of the NOK exchange rates & bond yields in March and Q1 2024
We analyse the development of the Norwegian krone (NOK) exchange rates and bond yields in March and Q1 2024. We do the analysis with support from a Power BI report that we have developed, which is available in our Portfolio. The source of all the data in the report is the Norwegian central bank – Norges Bank.
March 2024 overview
We start by filtering the report so that only data before the 1st of April 2024 is present in the report. We then go to the page below and expand the table so that the monthly development of the exchange rates is visible. We then click on March and consequently the page updates with March as a filter.
Zooming in on the chart with percentual change, it looks like the picture below. We see that NOK started the month by strengthening against several currencies, but it ended March by weakening against all currencies in the report except SEK.
From the table above, we see some notable changes to the NOK exchange rates in March 2024, for example:
- Weakening against Australian dollar (AUD) by 2.3%
- Weakening against Canadian dollar (CAD) by 1.9%
- Weakening against Euro (EUR) by 2.1%
- Weakening against US dollar (USD) by 2.1%
- Strengthening against Swedish krona (SEK) by 0.7%
Q1 2024 overview
Zooming in on the table from the picture above, we can see the total development for Q1 2024. In Q1 2024, NOK weakened against all currencies in the report except JPY.
Some notable changes to the NOK exchange rates in Q1 2024 are:
- Weakening against EUR by 3.6%
- Weakening against Pound sterling (GBP) by 4.6%
- Weakening against USD by 4.9%
- Weakening against SEK by 0.4%
- Strengthening against Japanese yen (JPY) by 1.4%
Bond yields
We also review the bond yields to explore possible reasons to the changes in the NOK exchange rates. From the picture below, we see that in March (the MTD value), all bond yields decreased. This is in contrast to the overall development in 2024, and year-to-date (YTD) the bond yields have still mostly increased.
For example, the 5 years yield decreased by 27 bps in March to 3.49%. So far in 2024, however, it has still increased by 26 bps. Compared to 1 year ago, the 5 years yield has increased even more – by 61 bps.
With regards to the bond spreads, that is the difference between bonds with longer duration and bonds with shorter duration, there have been no significant changes neither in March nor in 2024. All bonds with duration from 3 years to 10 years are within the range from 3.49% to 3.64%, so they are close and have seen similar movements so far in 2024.
Summary
In March, NOK weakened against many large currencies like EUR, GBP and USD. It weakened by 2.1% against EUR and USD and by 1.9% against GBP. In the time period of one month, this is not a dramatic change but it is still significant. The development in March is aligned with the overall development in 2024 where NOK has weakened against many currencies. For example, NOK has weakened against USD by 4.9% and against GBP by 4.6%. Meanwhile, it has strengthened against JPY by 1.4% and it is developing similarly to SEK – it has just weakened by 0.4% against SEK.
With regards to the NOK bond yields, they mostly decreased in March. This is in contrast to the overall development in 2024. For example, the 5 years yield decreased by 27 bps in March to reach 3.49% but so far in 2024 it has increased by 26 bps. In addition, compared to 1 year ago, it is 61 bps higher now.
