Norway central bank to buy more foreign currency for wealth fund

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OSLO — Norway’s central bank said on Wednesday it would sharply increase its purchase of foreign currency for its sovereign wealth fund in September, amid a surge in the country’s oil and gas revenues.

Norges Bank plans to exchange 3.5 billion Norwegian crowns ($355.41 million) per day into foreign currency, up from 1.5 billion per day in August, which will in turn be invested abroad by the $1.2 trillion wealth fund, already the world’s largest.

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The crown currency weakened on the news, falling to 9.89 against the euro at 0812 GMT from 9.82 just ahead of the announcement.

A spike in the price of petroleum this year, Norway’s main export, has led to a big inflow of tax revenue that exceeded government spending.

Economists have said that a larger purchase of foreign exchange, and thus selling a bigger volume of crowns, may weaken the Norwegian currency.

Norges Bank says its transactions are done for fiscal reasons on behalf of the state, and are not to be regarded as market intervention. ($1 = 9.8477 Norwegian crowns) (Reporting by Terje Solsvik, editing by Stine Jacobsen)