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The Krone Back in the Spotlight. Norges Bank's Moves on the Currency Market
The sale of NOK is linked to the state's budgetary flows. Fot. Jon Olav Nesvold, NTB Scanpix (CC BY-NC-SA 4.0)
Norges Bank has announced that until December 12, it will be selling a net 24 million NOK per day. The information was included in the institution's latest statement. In November, the central bank also sold 24 million NOK daily. In previous months, however, it opted to purchase the currency. The change results from the state's current budgetary needs.
The first part of the operation involves selling 150 million NOK daily on behalf of the state. These transactions are linked to the use of part of the oil revenues in the budget and with savings transferred to Norway's Pension Fund.
Norway receives revenues both in NOK and in other currencies. Some of the funds are used to cover the planned budget deficit. The remainder goes to the sovereign wealth fund.
Norway receives revenues both in NOK and in other currencies. Some of the funds are used to cover the planned budget deficit. The remainder goes to the sovereign wealth fund.
Krone Purchases for Dividend Needs
The second component is the daily purchase of 126 million NOK. The funds are intended to finance the state's dividend payout. In December 2024, Norges Bank approved a dividend of 30.1 billion NOK.
The central bank is therefore buying the krone to secure the transfer. The combination of both operations results in a net daily sale of 24 million NOK.
The central bank is therefore buying the krone to secure the transfer. The combination of both operations results in a net daily sale of 24 million NOK.
Part of Norway's revenues comes from foreign currencies.Photo: Adobe Stock, standard license
Market Actions Without Intervention
The currency transactions being carried out are not market interventions. They are not intended to influence the krone's exchange rate. They are a standard part of managing flows related to the budget and the sovereign wealth fund.
In the coming weeks, the market will be watching how the announced operations affect liquidity and the flow of funds in the financial system.
In the coming weeks, the market will be watching how the announced operations affect liquidity and the flow of funds in the financial system.
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