(Bloomberg) --
The Norwegian central bank will sell krone next month for the first time in nine years after the value of its electricity and petroleum exports was boosted by an energy crisis and Russia's invasion of Ukraine.
Norges Bank will buy 2 billion kroner ($230 million) worth of foreign currency a day on behalf of the government, it said in a statement. That's the first time it sells kroner since 2013.
The move would counteract higher krone purchases by oil and gas companies that need to pay taxes in the currency. The krone has been the third-biggest gainer this year among the G-10 group of the world's largest currencies as the impact of the war in Ukraine compounded the surge in energy prices in Europe.
“We have argued for a big U-turn for a while but are surprised that it came in one go now,” Danske Bank strategist Kristoffer Kjaer Lomholt said. He added the move shouldn't be interpreted as a currency intervention by Norges Bank to weaken the krone.
If there is excess tax income flowing to the government from the nation's petroleum sector, the central bank sells kroner and buys foreign currency. If there isn't enough tax income to cover Norway's budget deficit, the hole is filled by using some of the proceeds from the nation's $1.3 trillion sovereign wealth fund, the world's largest, to buy kroner.
“This means the window for a stronger NOK has closed,” said Dane Cekov, an analyst at Nordea.
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