Nov. 30 (UPI) -- The Norwegian central bank said Thursday it would sell foreign currency on behalf of the government through mid-December in petroleum-related activities.
Norges Bank said it will sell the equivalent of $108 million per day up to and including Dec. 15. The bank explained that it purchases foreign currency and, if the government's cash flow from petroleum-related activities is more than the non-oil budget deficit, it transfers the foreign exchange to a government pension fund and sells the rest on the open market.
"If the government's net cash flow from petroleum activities is insufficient to cover the non-oil budget deficit, foreign exchange will be transferred from the Government Pension Fund Global to cover some of the budget deficit," the bank said. "Norges Bank will then sell foreign exchange from the GPFG, as well as the foreign exchange from the state's direct financial interest, in the market."
The central bank said earlier this month it wanted to remove oil stocks from the government pension fund to cut the vulnerability to weak market prices. In a letter to the Norwegian Ministry of Finance, the bank said the removal would make Norwegian government wealth less exposed to a "permanent drop in oil and gas prices."
Norge Bank Deputy Gov. Egil Matsen cautioned that the recommendation was based on sound financial guidance, and does not reflect a particular view of future oil and natural gas prices. Brent crude oil prices are surging on the back of expectations of an extended OPEC production cut agreement, and trading around $63 per barrel early Thursday.
The central bank in October said the economy was struggling to pick up pace, with inflation expected to stay below 2.5 percent over the next few years. Oil and gas equities account for around 6 percent of the government's benchmark index, or about $36.6 billion.
The government owns shares in oil and gas major Statoil. The company reported adjusted earnings after tax for the third quarter at $2.3 billion, more than double the amount from the same period last year.