The price of crude oil has jumped this week as worries of the Omicron variant eases. Brent, the international benchmark, has risen to $74.16 while the West Texas Intermediate (WTI) has risen to $71. This could have some impact on some currencies. So, here are three currencies to buy as the price of oil rebounds.
Norwegian krone
Norway is one of the leading oil and gas producers in the world. The country produces more than 1.8 million barrels of oil per day. Unlike other countries, Norway exports most of these barrels since it of the leading consumers of electric vehicles.Â
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
Therefore, the Norwegian economy does well when the price of crude oil is rising since it leads to more foreign exchange. In addition to this, the Norges Bank has been relatively hawkish recently. It was one of the first global banks to start hiking interest rates.Â
And last week, it boosted rates by about 0.25%. It expects to keep hiking rates in the coming months. This makes the Norwegian krone a good currency to hold.
The chart below shows that the USD/NOK pair has been rising in the past few weeks. The rally is partly because of the hawkish Federal Reserve and the rising fears of the Omicron variant. Still, there is a possibility that the krone will do well in the near term.
Canadian dollar
Canada is another leading oil producer. Data shows that the country is the fourth-biggest producer in the world after Saudi Arabia, the United States, and Russia. Canada also exports a significant amount of crude oil mostly to the US.Â
Therefore, there is a likelihood that the country’s economy will do well as the crude oil price rebounds. For example, data published by the statistics agency showed that the country’s retail sales did well in November.
The Bank of Canada (BOC) has also been hawkish. This makes the Canadian dollar a good currency to buy. Like the USD/NOK pair, the USD/CAD price has been rising recently. So, one way you can take advantage of this is by shorting the EUR/CAD instead.
Mexican peso
Mexico is a leading crude oil producer that produces more than 2.4 million barrels per day. Therefore, while the peso is affected by many factors, a higher crude oil price helps.Â
Like the other two countries, the Mexican central bank has been relatively hawkish in the past few months. Just last week, the Banxico raised interest by 50 basis points in a bid to tame inflation. It has hiked rates in the past five consecutive meetings and hinted that more hikes are coming. This explains why the USD/MXN pair has retreated as shown below.
Where to buy right now
To invest simply and easily, users need a low-fee broker with a track record of reliability. The following brokers are highly rated, recognised worldwide, and safe to use:
- Etoro, trusted by over 13m users worldwide. Register here >
- bitFlyer, simple, easy to use and regulated. Register here >
