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NORWAY: Norges Bank May Start Buying NOK In 2025

NORWAY
CEEMEABulletNorwayGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets

Norges Bank may need to start buying NOK in its daily FX transactions from next year, according to MNI’s initial calculations.

  • From the full 2025 budget documents. we calculate relevant petroleum revenues at NOK416bln.
  • Subtracting the non-oil budget deficit of NOK414bln and petroleum-related activity expenditures of NOK30bln, this suggests almost NOK27bln will need to be purchased by Norges Bank to finance the non-oil budget deficit in 2025.
  • Across 249 “selling” days in the year (i.e. weekdays excluding bank holidays and the last week of the year), this implies average daily foreign exchange transactions of just under -NOK100mln (i.e, FX selling, NOK buying)
  • There is of course uncertainty with this estimate, as actual tax revenues/dividends may differ from the Government’s forecasts through the remainder of 2024 and into 2025. Swings in oil prices over the next year provide an obvious risk factor.
  • Additionally, Norges Bank will likely smooth changes in FX transactions from the current rate of NOK400mln/day (i.e. FX buying, NOK selling).
  • Full details of the budget, including a summary of announced measures, can be found here. 

 

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Norges Bank may need to start buying NOK in its daily FX transactions from next year, according to MNI’s initial calculations.

  • From the full 2025 budget documents. we calculate relevant petroleum revenues at NOK416bln.
  • Subtracting the non-oil budget deficit of NOK414bln and petroleum-related activity expenditures of NOK30bln, this suggests almost NOK27bln will need to be purchased by Norges Bank to finance the non-oil budget deficit in 2025.
  • Across 249 “selling” days in the year (i.e. weekdays excluding bank holidays and the last week of the year), this implies average daily foreign exchange transactions of just under -NOK100mln (i.e, FX selling, NOK buying)
  • There is of course uncertainty with this estimate, as actual tax revenues/dividends may differ from the Government’s forecasts through the remainder of 2024 and into 2025. Swings in oil prices over the next year provide an obvious risk factor.
  • Additionally, Norges Bank will likely smooth changes in FX transactions from the current rate of NOK400mln/day (i.e. FX buying, NOK selling).
  • Full details of the budget, including a summary of announced measures, can be found here. 

 

Keep reading...Show less