NORWAY: Norges Bank FX Purchases Set To Increase From Next Year
Oct-15 14:01
Based on the details of Norway’s 2026 budget proposal, analysts expect Norges Bank daily NOK purchases to increase from next year. Early estimates we have seen range from NOK600-800mln/day, up from NOK276mln at present. These figures will be refined once budget negotiations conclude, likely in December.
JP Morgan:
- “The deficit is [presumably] larger than Norges Bank’s assumption, suggesting a marginal hawkish impact.”....“The fiscal impulse is estimated at 0.4%, while a separate estimate of fiscal thrust is just 0.1%”…“The latter estimate tends, however, to under-estimate the actual impact. We expect 2026 fiscal thrust at 0.5%”
- “We estimate that the Budget, in isolation, indicates net NOK purchases of 0.67bn/day, on average, in 2026. On top of the projections from the Budget, Norges Bank’s profit transfer to the oil fund needs to be taken into account ….Assuming profits amount to roughly the same as in 2025, this gives total NOK buying of ~0.8bn/day….For the remainder of 2025, we see upside risk to the current pace of 0.276bn/day NOK buying.”
- “Bear in mind that increased NOK purchases by Norges Bank does not imply that total net NOK demand increases in the market. The reason is that prior to Norges Bank’s NOK purchases the private petroleum companies convert taxes—which are in foreign currencies —to NOK. These taxes, which are much larger in size, are now expected to decline compared to 2025”
SEB:
- “The budget underscores the general notion that fiscal demand impulses will ease, but overall spending is broadly in line with Norges Bank’s estimate and should thus not impact the monetary policy outlook.”
- “The need for daily NOK purchases will increase in 2026. On the one hand, the non-oil budget deficit will decrease by NOK 35bn to 452bn, but on the other hand the fall in NOK-denominated petroleum income will be larger. Our first take given the budget translates into NOK purchases of around 600-650mn per day on average.”
- “The budget implies an underlying borrowing need of NOK 96bn, which is broadly stable from 2025. We believe Norges Bank wants to keep supply broadly stable while building up the cash reserve if possible. Hence, we expect a stable borrowing interval of NOK 95-105bn, or possibly NOK 100-100bn. “
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