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Hormuz reopening could support SEK versus NOK, Commerzbank says
Commerzbank links any SEK outperformance to lower oil prices, plus rate-hike expectations being scaled back in both Sweden and Norway.
Commerzbank currency analyst Michael Pfister says a sustainable reopening of the Strait of Hormuz could strengthen the Swedish krona versus the Norwegian krone, mainly through oil-price moves and shifting interest-rate expectations.
In his assessment of NOK/SEK, Pfister argues the Norwegian krone is more sensitive to changes in oil prices, noting Sweden’s dependence on energy imports is comparatively low. He cites that the gap between energy imports and exports as a share of total exports is -1.8% for Sweden versus 57% for Norway.
Pfister also says that oil shocks appear to drive expectations for Sweden’s Riksbank more than for Norway’s Norges Bank, and he expects both currencies to be affected if oil falls and the market prices out rate-hike expectations.
Overall, he frames the likely outcome as falling oil boosting SEK, while NOK would reflect a stronger oil-driven reaction, with he adding that the SEK impact could be partially offset by the interest-rate expectation adjustment.