There has long been speculation about lower kroner sales from Norges Bank, but instead sales are now being increased to 1.1 billion kroner per day.
The short version
Norges Bank increased kroner sales by NOK 100 million to NOK 1.1 billion per day in September, according to Letter from the bank.
– From a psychological point of view, this is not good news for the krone, Nordea Markets economist Dane Cekov wrote in a comment.
The krone has weakened by about five cents against both the euro and the dollar, now costing NOK 11.59 and NOK 10.65, respectively.
The sale of kroner over time is largely offset by oil companies’ purchases of kroner to pay taxes. Given their size, they can still affect the krone’s exchange rate, especially since exchanges do not necessarily coincide in time.
Sykov believes that the krone will remain weak in the coming months and also sees the risk of further weakness of the krone.
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SEB Chief Strategist Erica D’Alstto explains the weakness of the krone today with the outlook in the market.
– The market had already expected throughout the year that krone sales would be revised downwards, so we are now witnessing disappointment in the market in the form of krone weakness, she tells E24.
Dalstto believes that the market is somewhat optimistic about the prospects for krone sales.
– We don’t expect any major changes during the year, she says.
The kroner is sold (exchanged) so that you can transfer foreign currency to the oil fund that invests abroad. It should not be confused with currency intervention, which means that the central bank sells kroner to influence the kroner exchange rate.
Better prospects for the krone next year
After increasing kroner sales to 1.9 billion kroner per day in February, they later decreased gradually and amounted to 1.0 billion kroner per day in the past two months.
The value of the krone has fluctuated a bit this summer, but it is much weaker than it was at the same time last year. This means that shopping from or traveling to countries that use these currencies costs us more. In return, it will be easier to sell Norwegian goods abroad.
In the short term, the SEB strategist sees the risk of the krone devaluing slightly. This depends, among other things, on the fact that the krone has strengthened somewhat over the summer and there is uncertainty in the markets which dampens risk appetite.
– But next year, we think the outlook can be improved, provided we avoid a hard landing for the economy, she says.
Dalstow believes that the US central bank will be the first to cut interest rates, while it will take much longer before that happens here at home. This is positive for the krone exchange rate.
For several years, Norges Bank bought kroner on behalf of the state, so that oil revenues in foreign currency could be used for the state budget.
But since April last year, the situation has reversed, when krone inflows have exceeded the amount that was supposed to go into the national budget. Large sums of kroner from tax payments are now sold to oil companies every day.
As a general rule, Norges Bank has tried to facilitate krone transactions throughout the year, in order to avoid unnecessary disturbances in the currency market. But in the past six months, unusually big changes have occurred.
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