Commodity currencies - Canadian dollar, Australian dollar, New Zealand dollar, Norwegian krona, Brazilian real and Mexican peso - tend to rally during periods of improved risk appetite associated with rising equity markets and decline during eroding market confidence and stock market declines. But which currency has shown robust gains during risk appetite and relatively modest declines in time of market panic? The answer is the Norwegian krona, or the Nokkie. Before discussing the Nokkie's performance, let's look at Norway's underlying fundamentals. The nation's oil and gas sector makes up about 25% of the overall economy, and more than 50% of total exports. Strong energy earnings have given Norway the fifth largest current account position in international trade, behind China, Japan, Germany and Russia. Current account balance strength is always a plus in currency economics, allowing a currency to better absorb losses during global risk aversion and rebound faster during recoveries.
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