Sharp rise in turnover in the Norwegian foreign exchange market
Turnover in the Norwegian foreign exchange market increased by 45.6% from April 1998 to April 2001. In the same period, the total value of exports and imports expanded by 33%. Turnover in April 2001 amounted to USD 233.2bn. Transactions with foreign sectors accounted for more than 80% of turnover, and forward trading, including currency swaps, accounted for 72.9% of turnover. The US dollar was by far the most widely traded currency, as it was in 1998. The results are presented in a survey of activity in the Norwegian foreign exchange and derivatives market conducted by Norges Bank among 11 banks in April this year as part of a joint international project under the auspices of the Bank for International Settlements (BIS)1.
Low euro share and increasing NOK participation
The euro was involved in the survey for the first time, and accounted for 16.7% of turnover. This is lower than the Deutsche mark’s share of 17.2% in 1998. The low euro share shows that the euro has not gained the position in the Norwegian foreign exchange market that many had expected. The US dollar was involved in 43.8% of all turnover, up from 41.5% in 1998. The Norwegian krone was involved in 32% of turnover, an increase of just 2 percentage points on 1998.
The share of forward transactions, including currency swaps, rose from 65.8% in 1998 to 72.9% in 2001. In 2001, forward contracts with a maturity of less than seven days accounted for 56.6% of turnover in the forward market. This is a decline of almost 20 percentage points in relation to 1998. Contracts with maturities of between seven days and one year accounted for 41.9% of turnover in 2001, almost double the 1998 figure. The share of contracts with maturities of over one year remained unchanged from 1998 to 2001.
Only a moderate increase in the use of interest rate derivatives
Turnover of interest rate derivatives increased by 3.2%, and amounted to USD 52.3bn in April 2001. Forward rate agreements (FRAs) accounted for 89.1% of turnover. This is a decline of 5.2 percentage points in relation to 1998. The Norwegian krone was involved in 89.8% of total turnover in FRAs. Interest rate swaps and interest rate options almost doubled their share of turnover from 1998 to 2001, to 10.4% and 0.5% respectively.
Further information may be obtained from: Sindre Weme, Head of Division, telephone: +47 22 31 62 65
1While Norges Bank was carrying out its survey, similar surveys were conducted in 47 other countries. The survey was designed and coordinated by the Bank for International Settlements (BIS). Similar surveys have been carried out every three years since 1989. Norges Bank will present a broader analysis of activity in the Norwegian market in the Economic Bulletin. The article will also contain data on outstanding claims in the Norwegian foreign exchange and derivatives market. The BIS will publish a report on the survey in spring 2002.