Assignment on Finance, Analytics and Strategy.docx

2298 MSc International Business Management
Finance, Analytics and Strategy
Student Name:
Student ID:
1

Table of Contents
1. Introduction..................................................................................................................................4
2. Data Collection and Analysis......................................................................................................4
2.1 Sources of exchange rate data................................................................................................4
2.2 Graphical analysis of trends...................................................................................................5
2.3 Key fluctuations and trends...................................................................................................6
3. Key Drivers of Currency Fluctuations.........................................................................................7
3.1 Economic and geopolitical factors.........................................................................................7
3.2 Historical impact on exchange rate........................................................................................8
4. Strategic Decision-Making Applications.....................................................................................9
4.1 Application of decision-making theories...............................................................................9
4.2 Forex risk management strategies.......................................................................................10
4.3 Potential hedging strategies.................................................................................................11
5. Key Findings and Recommendations........................................................................................11
6. Conclusion.................................................................................................................................12
References......................................................................................................................................14
Appendix........................................................................................................................................16
Slide 1
2

1. Introduction
Slide 3
By considering the EUR and NOK, a critical analysis of the exchange rate movements is being
conducted to explore their patterns in the first months of 2025. Through this presentation, key
factors that have a direct connection with market stability of currency exchange rates are
identified. In exploring market trends, euro and Norwegian krone are considered because
Norway has a strong trade connection with the European Union. As the value of Norwegian
krone is affected by several factors including macro-economic factors, value calculation of euro
against Norwegian krone are required significantly. This trend analysis also helps in
understanding currency fluctuations and their impact on international trade decisions.
4

2. Data Collection and Analysis
2.1 Sources of exchange rate data
Slide 4
The historical exchange rate data of EUR/NOK are collected from Investing.com. This online
platform provides reliable data of exchange rates by allowing users to customise their require
times. To collect the data of exchange rate, I have followed several steps such as I visited the
online portal of this website. After visiting the portal, I entered my currency names in the search
bar that is located in the first page. The website represents the historical exchange rate data with
an option for customisation. After that, I adjusted my preferable date and download the dataset in
CSV format to access it properly.
2.2 Graphical analysis of trends
Slide 5
5

Graphical representation of currency exchange rate of EUR/NOK:
Figure 1 Surrency exchange rate of EUR/NOK
Source: (investing, 2025)
2.3 Key fluctuations and trends
Slide 6
6

The value of euro against the Norwegian Krone has experienced a significant volatility during
the first month of 2025. For example, the value of euro has declined to 11.6874 on 2nd
January.
However, it has a consistent growth for next 8/9 days, representing quick recovery and weak
currency demand for Norwegian Krone (yahoofinance, 2025). Conversely, an unexpected
demand dropped for euro might reduce the overall exchange rate during the mid-January. Over
the time, the value of euro against Norwegian Krone adjusted again with a growth as well. This
means the exchange rate has volatility during this month.
3. Key Drivers of Currency Fluctuations
3.1 Economic and geopolitical factors
Slide 7
7

The exchange rate of EUR/NOK has influenced by several geopolitical and economic factors.
These factors are
Central bank policies and interest rates:
Interest rate influences investors’ perceptions by attracting them and therefore, the currency
value and demand increases (Wang et al., 2023). For example, an increase in the interest rates in
Norway may increase its currency value by attracting its investors.
Economic growth and inflation:
Lower inflation increases the value of national currency while it may reduce when the inflation
rate increases. As a result, economic growth and inflation affects the currency exchange rates.
Political events and trade:
International trade increases the value for national currency while political instability reduces
overall currency demand as it reduces investment and trade (Menkhoff et al., 2017). As a result,
trades affect the currency exchange rates.
3.2 Historical impact on exchange rate
Slide 8
8

Historical data represents that rising oil prices and trade volume increases the currency value of
Norway against others in 2022 (Risstad et al., 2023). This means there is a strong connection
between trade policies and currency values. Moreover, the country has also experienced high
currency value in respond of increasing interest rate in 2023 from 4.25 to 4.5 (norgesbank,
2025). During pandemic period, the overall economic growth declined and the currency demand
also reduced in the international market.
4. Strategic Decision-Making Applications
4.1 Application of decision-making theories
Slide 9
9

According to the game theory, decisions are internally connected and influenced by the actions
of others (Mimbang & Probert, 2016). In the currency market, investors may buy NOK when the
national government increases interest rates that raises currency value as demand increases. The
theory of behavioural finance suggests that financial decisions are significantly shaped by the
psychological factors (Kapoor & Prosad, 2019). In the context of currency market, pandemic
situation and political instability may result in sudden currency fluctuations. Besides, the rational
decision-making theory states that investors decisions in the currency market are depended on
the available data (Ainsworth, 2020). This means that investors evaluate existing information
like inflation and interest rates to take their investment decisions.
4.2 Forex risk management strategies
Slide 10
10

In managing foreign exchange risk, as a financial manager would consider several steps and
factors to make more sound decisions. I would consider the historical exchange rate data to
understand the market trends and seasonal fluctuations over past years (Pellegrino et al., 2023).
Besides, I would evaluate the economic performance through key macroeconomic factors
including interest rates, exchange rates, and GDP growth rates. Because economic growth
increases overall currency demand in the currency market.
4.3 Potential hedging strategies
I would incorporate various hedging strategies like options, swaps, forward, and futures to
reduce risks. In that case, forward contract would use to deal with unfavourable movements in
the exchange rates (Lamine et al., 2023). Besides, option contracts would be utilised in securing
a fixed and favourable rate by providing a fixed primum. In ensuring stable return, I would use
the currency swaps that allows to get stable cashflows in adverse market conditions.
5. Key Findings and Recommendations
Slide 11
11

The value of euro against the Norwegian Krone in the forex market has experienced a significant
volatility. For example, the value of euro has declined initially in the beginning of the month
with a a consistent growth for the rest days. In that case, several factors affecting this value
including geopolitical and economic factors, political stability and trades, and so on. Investors
should consider some key recommendation to participate in the forex market, such as
 Investors should consider the central bank policies and understand their impact on the
value of national currency.
 They have to employ various hedging strategies to ensure stable return during return
fluctuation.
 Investors need to promote diversification in order to form the most optimal portfolio in
the forex market.
6. Conclusion
Slide 12
12

Data analysis is crucial in the currency market in order to predict the market trends in the most
effective ways. Besides, data-driven decision helps in reducing potential losses from unexpected
currency fluctuations. Alongside this, analysing historical data helps in developing the optimal
portfolio in the currency market.
13

References
Slide 13
Ainsworth, S.H. (2020) ‘Rational choice theory in political decision making’, Oxford Research
Encyclopedia of Politics [Preprint]. doi:10.1093/acrefore/9780190228637.013.1019.
investing (2025) EUR NOK: Euro Norwegian Krone, Investing.com. Available at:
https://www.investing.com/currencies/eur-nok (Accessed: 25 March 2025).
Kapoor, S. and Prosad, J.M. (2019) Behavioural finance. New Delhi, India: SAGE.
Lamine, A., Jeribi, A. and Fakhfakh, T. (2023) ‘Spillovers between cryptocurrencies, gold and
stock markets: Implication for hedging strategies and portfolio diversification under the COVID-
19 pandemic’, Journal of Economics, Finance and Administrative Science, 29(57), pp. 21–41.
doi:10.1108/jefas-09-2021-0173.
Menkhoff, L. et al. (2017) Currency value. London: Centre for Economic Policy Research.
Mimbang, J.B. and Probert, C. (2016) Game theory. Namur, Belgium: Lemaitre Publishing.
norgesbank (2025) Rate decision January 2025. Available at:
https://www.norges-bank.no/en/topics/Monetary-policy/Monetary-policy-meetings/2025/
january-2025. (Accessed: 25 March 2025).
14

Pellegrino, R., Gaudenzi, B. and Zsidisin, G.A. (2023) ‘Mitigating foreign exchange risk
exposure with supply chain flexibility: A real option analysis’, Journal of Business Logistics,
45(1). doi:10.1111/jbl.12338.
Risstad, M. et al. (2023) ‘On the exchange rate dynamics of the Norwegian krone’, Journal of
Risk and Financial Management, 16(7), p. 308. doi:10.3390/jrfm16070308.
Wang, W. et al. (2023) ‘Robust optimal investment strategies with exchange rate risk and default
risk’, Mathematics, 11(6), p. 1550. doi:10.3390/math11061550.
yahoofinance (2025) Yahoo Finance – Stock Market Live, quotes, business and Finance News,
Yahoo! Finance. Available at: https://uk.finance.yahoo.com/ (Accessed: 25 March 2025).
Slide 14
15

Assignment on Finance, Analytics and Strategy.docx

More Related Content

Similar to Assignment on Finance, Analytics and Strategy.docx (20)

Recently uploaded (20)

Assignment on Finance, Analytics and Strategy.docx