NORWAY - Spiralling oil prices has forced the Norges Bank to resume purchases of foreign currency for the Government Petroleum Fund.
The bank said that the rising oil prices had increased the need for allocations to the Petroleum Fund.
This is the first time that the bank will enter the market as a buyer this year. It had discontinued its foreign currency purchases last year as a result of stable oil prices.
Oil prices rose last week following a strike by oil workers over pensions and labour rights. The strike cut production by more than 10%. On Friday, the Norwegian government halted the week-old strike.
The Norges Bank said: “As from July, Norges Bank will resume daily purchases of foreign currency on behalf of the Government Petroleum Fund.
The daily foreign currency purchases for July have been set at NOK300m.” Allocations to the Fund will be covered partly by transfers of foreign exchange revenues from the State’s Direct Financial Interest in petroleum activities (SDFI) and partly by Norges Bank’s currency purchases in the foreign exchange market, it added.
The foreign currency purchases will be determined on the basis of the difference between the estimated monthly allocation to the Petroleum Fund and foreign exchange revenues from SDFI in the month in question.
Over the first quarter 2004, there was a transfer of new capital amounting to NOK22bn. Last year, the fund received NOK103.9bn during the year as transfers from the government.
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