Norges Bank too Increase Krone Purchases Amid Lower Oil Revenue Outlook
OSLO – Norges Bank is expected to considerably increase its purchases of kroner next year, primarily due to anticipated lower oil revenues, according to reporting from E24.despite a possibly slightly lower oil-corrected budget deficit this year, the central bank is projected to maintain an average need for krone purchases of at least NOK 650 million per day through 2026.
“This is a temporary change, that is the main point,” a source stated, adding that the amounts involved are “relatively small” and ”should not be decisive for the krone’s progress.”
The move surprised some analysts. Kyrre Aamdal,a senior economist at DNB Carnegie,had anticipated krone sales in november,estimating purchases of NOK 450 million daily. He noted a “very large discrepancy” between his forecast and Norges Bank’s expected activity.
Aamdal explained that even minor revisions to annual figures – such as the oil-corrected budget deficit or oil tax revenues – can substantially impact daily purchase amounts given the limited number of trading days remaining this year. He cautioned against overinterpreting short-term deviations, suggesting the annual estimates may remain broadly accurate. “It may also be that Norges Bank has received some more data then we had,” he added.
These currency transactions differ from currency intervention, which involves direct attempts to influence the krone exchange rate. Norges Bank uses oil revenues – received in both kroner and foreign currencies – to cover the oil-adjusted deficit in the state budget,with the remainder being saved in the Goverment Pension Fund Global (Oil Fund).
