NOK Rises on No FX Buying

Norway’s krone strengthened the most in more than seven weeks against the euro as the nation’s central bank said it would halt foreign-currency purchases for its sovereign wealth fund.

The krone appreciated at least 0.2 percent against all of its 16 major peers. The Norges Bank said it won’t buy any foreign currency for its $650 billion fund next month after purchasing 500 million kroner ($87.6 million) a day in September and October. The central bank kept its benchmark interest rate unchanged at 1.5 percent, while pushing back plans to increase borrowing costs.

“Norges Bank refraining from foreign-exchange purchases in November was a big surprise,” Katrine Boye, a senior economist at Nordea Bank AB in Oslo, wrote in an e-mailed note to clients. “The decision not to purchase in November points in the direction that the need for foreign-exchange in 2012 is already covered.”

The krone strengthened 0.5 percent to 7.3945 per euro as of 5:07 p.m. in Oslo after gaining as much as 0.7 percent, the most since Sept. 7. It appreciated 0.5 percent versus the dollar to 5.7056.

Norway’s central bank converts oil revenue into foreign currency, which its wealth fund invests abroad to avoid overheating the domestic economy.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell