In the coming months, 47 billion Norwegian kronor will be paid to the owners of Norway's largest listed companies, up from about 35 billion Norwegian kronor last year, according to strategist Nordea Joachim Bernhardsen.
Most of the money remains in Norwegian kroner, but the cash flow to foreign investors is still so great that it can affect the currency's exchange rate, especially on certain days.
The reason is that foreign investors holding Norwegian shares and receiving dividends in NOK can choose whether to sell the kroner to transfer the funds to other currencies or investments abroad.
Dates to keep an eye on
The DNB will pay dividends of NOK 13.2 billion on May 10, and about 5 billion of these will go to foreign owners, according to Nordea Markets.
– We want to keep an eye on the currency flow around the DNB dividend on May 10 and the Equinor dividend on May 20, as these dividend distributions have the potential to provide temporary movements in the currency's exchange rate, writes Bernerdsen in an analysis.
Equinor pays its dividend in dollars, which, on the other hand, will have a positive effect on the crown, as a high proportion of Norwegian investors will exchange the dividend in NOK.
Globally, Nordea Markets does not believe that the dividend season is a major driver for the long-term crown, but points out that large sums can, however, provide a volatile exchange rate during this period.
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Higher probability of raising interest rates in June
The exchange rate of the US currency recently strengthened, among other things, after higher than expected inflation in March and higher oil prices.
Quarterly money market rates (NIBOR) rose to 1.40 percent last week, the highest in four years, with rising expectations that Norges Bank moves in the opposite direction from the Fed and the EU and raise rates interest rate in June.
"The market is now slowly and reluctantly acknowledging that Norges Bank may increase again in June," Nordea Markets writes in an analysis.
Norges Bank raised its interest rate for the second time in seven years in March to 1.0%. At the same time, the central bank announced another rise in the next six months, with a slight probability of overweight in June.
The US Federal Reserve, on the other hand, has canceled further interest increases at its March meeting and the European Central Bank (ESB) has ruled out interest rate hikes in 2019. Thus, it is uncertain to what extent Norges Bank can tighten to avoid an undesirable increase of the coin.
– In a world where Norges Bank will set the interest rate alone, however, Norwegian interest rates will be among the highest in the G-10 next year. It advocates a more significant strengthening ahead of time, while the potential is more limited in the short term, writes Nordea.
Interest rate increase in June or September
Stronger Than Expected Norwegian inflation in March strengthened Nordea Markets on the belief that the interest rate hike will already take place in June.
– This increase in the interest rate is not yet priced in the market, so rising expectations for the June increase should support NOK, but we probably need closer to the interest rate meeting to make it a driver, writes Nordea Markets.
Initially, Nordea believes that the strengthening is limited to around 9.55 against the euro.
DNB Markets still maintains an increase in interest rates in September.
"We believe the crown will remain around the current level in the future and will strengthen to 9.50 in three months," DNB Markets economist Kyrre Aamdal told E24.
Aamdal points out that the market currently does not have a price higher than about a 40% chance of interest rate hikes in June, while a September interest rate hike is almost fully priced.
– We still believe that the September interest rate hike is more likely than in June, and it seems that the market price seems reasonable, he says.