Norges Bank to Hold Off on FX Reserve Purchases
Norges Bank, which manages Norway’s Government Pension Fund Global (GPFG), will not be making foreign exchange (FX) purchases in January 2014.
Norges Bank is slated with the task of maintaining FX reserves. It does this by collecting North Sea oil revenues denominated in foreign currencies and FX purchase on the market into a common fund known as the petrobuffer. The appropriate allocations are then transferred to the GPFG on a monthly basis.
Norway’s Ministry of Finance determines the size of monthly transfers, but Norges Bank is actually responsible for the purchases, transfers and maintaining the petrobuffer.
If the petrobuffer is large enough (or if allocations to the fund decrease), Norges Bank holds off on FX purchases.
Deciding to forego FX purchase in January is not common for Norges Bank, although it is not unheard of; this will be the 5th January in 13 years. Instead the bank tends to slow down its purchases near the end of the year in order to shrink the petrobuffer, according to its website.
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