NORWAY - Norges Bank will reduce the size of its buffer portfolio for foreign exchange purchases made on behalf of the NOK942.4bn (e114bn) government petroleum fund in 2005.
Announcing that it would continue to suspend foreign exchange purchases for the fund in January, Norges Bank said it intended to reduce the size of the buffer portfolio during the first quarter of 2005.
Foreign exchange from the state’s direct financial interest in petroleum activities (SDFI) and from Norges Bank’s daily purchases accumulate through the month in the buffer portfolio, which is part of Norges Bank’s foreign exchange reserves. At the end of the month, funds are transferred from the foreign exchange reserves to the petroleum fund.
“A substantial part of the reduction will take place in January,” the Bank said in a statement.
The Bank suspended foreign exchange purchases in December due to a “lack of liquidity in the markets” at that time.
The decision to continue the suspension through January was partly because the November allocation to the petroleum fund was “substantially reduced”.
“In addition, some of the state’s direct financial interest in petroleum activities’ foreign exchange income in December was transferred to the buffer portfolio to minimise the government’s transaction costs,” the Bank said.
The Ministry of Finance determines the size of monthly allocations to the fund.
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