Norges Bank increases krone sales to 550 million per day – E24

The krone weakens slightly after Norges Bank surprised by increasing krone sales.

Norges Bank is increasing krone sales to NOK 550 million per day in May, according to a message from the central bank.

In advance, it was expected that krone sales would remain unchanged at 350 million from the previous month.

The krone sale (exchange) takes place to transfer currency to the Oil Fund, which invests abroad. It must not be confused with currency intervention, which means that the central bank sells or buys kroner to influence the krone exchange rate.

At the same time last year, Norges Bank sold NOK 1.4 billion per day, but in the last four months sales have been NOK 350 million.

Slightly weaker krone

Right after today’s news, the krone weakened by around 3 øre, so that one euro now costs NOK 11.82 and one dollar NOK 11.05.

In the last two years, the krone has weakened by almost 20 per cent. This means that it has become more expensive to buy goods from abroad or travel abroad. At the same time, Norwegian-produced goods become cheaper for foreigners, and thus easier to sell.

The krone sale is largely balanced over time by the oil companies’ krone purchases to pay tax. News about the sale can nevertheless affect the krone exchange rate, both because of the size and because the exchanges do not necessarily take place at the same time.

For several years, Norges Bank bought kroner on behalf of the state, so that oil revenues in foreign currency could be used over the state budget.

But from April 2022 the situation reversed, when the krone flows exceeded the amount that was supposed to go into the state budget. Considerable kroner sums from the oil companies’ tax payments are now sold every day.

As a rule, Norges Bank has tried to smooth out the krone transactions throughout the year, in order to avoid unnecessary unrest in the currency market.