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NOK: Analysts Highlight Risk Of Norges Bank Buying NOK In First Half of December

NOK
USCEEMEABulletNorwayMarketsForeign Exchange BulletsNorth America

DNB expect Norges Bank daily FX purchases of -NOK150mln in December (i.e. purchasing NOK, selling FX). This would be the first time since January 2022 that Norges Bank would be purchasing NOK in its daily transactions. If realised, MNI wouldn’t be surprised to see some knee-jerk NOK strengthening on the news, but would expect the moves to lack traction given the limited magnitude of the purchases. 

  • DNB write that “earlier this month, the government announced extra financial support for municipalities, with allocations lifted by NOK5bn this year and the next”.
  • “Funding an extra NOK5bn over half of December would mean a shift from selling NOK150m/d to purchasing NOK350m/d. However, there are other moving parts in government cash balances, and we expect to see Norges Bank switch to purchasing FX for NOK150m/d for the first part of December”. 
  • SEB expect FX purchases to remain steady at NOK150bln (i.e. selling NOK, purchasing FX), but “see risks skewed towards lesser sales, or even purchases of NOK, as public expenditures are likely to have increased faster than anticipated”
  • Note that Norges Bank usually only participate in the FX market in the first two weeks of December, due to falling market liquidity in the second half.
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DNB expect Norges Bank daily FX purchases of -NOK150mln in December (i.e. purchasing NOK, selling FX). This would be the first time since January 2022 that Norges Bank would be purchasing NOK in its daily transactions. If realised, MNI wouldn’t be surprised to see some knee-jerk NOK strengthening on the news, but would expect the moves to lack traction given the limited magnitude of the purchases. 

  • DNB write that “earlier this month, the government announced extra financial support for municipalities, with allocations lifted by NOK5bn this year and the next”.
  • “Funding an extra NOK5bn over half of December would mean a shift from selling NOK150m/d to purchasing NOK350m/d. However, there are other moving parts in government cash balances, and we expect to see Norges Bank switch to purchasing FX for NOK150m/d for the first part of December”. 
  • SEB expect FX purchases to remain steady at NOK150bln (i.e. selling NOK, purchasing FX), but “see risks skewed towards lesser sales, or even purchases of NOK, as public expenditures are likely to have increased faster than anticipated”
  • Note that Norges Bank usually only participate in the FX market in the first two weeks of December, due to falling market liquidity in the second half.