Currency Traders Lash Out as Norwegian Data Spat Threatens Kroneby
Norwegian bond and currency traders are recoiling at a plan by the statistics agency to start releasing key economic data at 7 a.m., arguing such an early dissemination will increase volatility and is a danger to the krone.
The Norwegian Securities Dealers Association, on behalf of Nordea Bank, DNB ASA and Danske Bank, is sending a letter to Statistics Norway where it “strongly encourages” the publication time be kept at 10 a.m., said Sindre Stoeer, chief executive officer of the group.
“In the majority of western countries there seems to be great awareness, and a guide, among statistics agencies that data is released when all financial markets are open and have good liquidity,” Stoeer said by telephone. The change will likely cause market-makers to demand wider spreads and maybe even “pull back” from the market, he said.
The krone is already one of the least liquid of the major currencies, with larger swingsthan its nearest counterparts in Sweden and Denmark and bigger countries such as Switzerland and Canada. A more volatile currency could make foreign investors more reluctant to invest in the country, potentially pushing up interest rates for both the government and local companies.
By comparison, statistics in other countries and regions are released after the market opens, including 8 a.m. in Germany, 8:30 a.m. in the U.S., 9:30 a.m. in neighboring Sweden and typically 11 a.m. in the euro area. The Netherlands, which has the euro as its currency, releases data as early as 6:30 a.m.
The Norwegian Statistics Agency’s earlier release time will come into effect as of Sept. 23, which it says will give its users more access to data during the whole working day.
It’s now unimpressed by the protestations of the markets.
“We have a mandate to society to bring good quality statistics at the right time and as early as possible for everyone at the same time,” said Torstein Bye, a director for the department of economics, energy and environment statistics. “When we considered this it was our assessment that 7 a.m. would be a proper time.”
There’s currency trading going on 24 hours a day and it should be possible to adjust trading to avoid thin markets, he said. If something goes wrong with respect to the statistics, the agency’s staff will be available to answer questions at the office or at home, he said.
“If we are changing, then others should also change,” he said.
SEB AB, Scandinavia’s top currency trader, said the move could add to “frustration” for investors seeking put money in Norway, according to Carl Hammer, chief currency strategist in Stockholm.
“When we speak with financial institutions, the non-corporate base, people are primarily interested in trading and investing in Norway and in the currency,” he said. “But it’s a market that is very hard to read because of low liquidity.”
Norway’s central bank declined to comment on the change in publication times. The bank always has the “necessary preparedness,” spokeswoman Therese Riiser Waalen said in an e-mail. “The krone is floating and we don’t control it. We manage liquidity in the form of Norwegian banks’ reserves at the central bank.”
Full disclosure: Bloomberg News has also contacted the Statistics Agency to ask them to reconsider such an early publication time.