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OSLO, March 31 (Reuters) - Norway’s central bank will not purchase any foreign currency for the country’s sovereign wealth fund in April and does not expect to do so in the near future, it said on Monday.
The central bank, which manages the world’s largest sovereign wealth fund, the Government Pension Fund Global (GPFG), frequently converts surplus tax revenues into foreign currency to buy stocks, bonds and real estate.
“Norges Bank’s estimates as of March 2014 indicate that there will probably be no need to purchase foreign exchange in the market in the coming months,” the bank said in a statement on its website.
The bank has made no currency purchases since the end of October, and said it might even have to sell forex in time.
“Somewhat further out, the government’s foreign currency revenues ... may exceed the transfers to the GPFG. In that case, the surplus foreign exchange will have to be sold in the market,” it said in the statement.
Norges Bank said smaller transfers to the oil fund as petroleum revenues have fallen in recent years meant the need to buy foreign currency had decreased. More petroleum revenues have also been spent each year via the central government budget.
The oil fund invests Norway’s saved up wealth from oil and gas production for future generations. The Nordic country is the world’s seventh-biggest oil exporter and Western Europe’s leading gas exporter.
Erica Blomgren, chief strategist at SEB Norway, said the bank’s statement increased the chance that Norges Bank will not make foreign exchange purchases in 2014, a positive for the crown currency.
“There is a real possibility that the bank has to buy crowns towards the end of the year, but... I don’t think the size will be big enough to affect the currency significantly,” she said.
Reporting by Camilla Knudsen and Nerijus Adomaitis; Editing by Catherine Evans