Norway: Surprisingly low FX purchases in June
Today Norges Bank announced FX purchases for June. To our surprise the central bank chose to keep FX purchases flat at (selling) NOK 350m/day. Since the revised government budget was presented on May 10th the oil price has fallen some 5%. Still we see the current projections made in the revised budget as reasonable (average oil price forecast at NOK 650) and hence our calculation of FX purchases for the reminder of the year slightly north of NOK 700m/day stands. Hence, barring an oil price collapse and recession in Norway (very unlikely) this number (350m/NOK) only adds to the “catch-up effect” of FX purchases later in the year. October and November are most likely to see FX purchases close to/above NOK 1000m/day providing (then) an obstacle for NOK trade-weighted appreciation. We revise lower our 1-3 month forecast slightly to 7.50 (from 7.55/7.60) but still expect the 7.40-area to provide a decent risk reward buying EUR/NOK ahead of the significantly rising FX purchases in Q4 2012.
SEB