Krone Rises Most in 7 Weeks on Halt in Foreign-Currency 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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