By Terje Solsvik and Gwladys Fouche
OSLO (Reuters) – Norway’s central bank said on Thursday it is considering entering the market to buy its own crown currency, which has lost a third of its value so far this year, in a step it has not taken since early 1999.
Danske Bank Chief Economist Frank Jullum urged it to buy “by the bucketful”.
The crown currency weakened to 13.1678 per euro on Thursday and has plunged this year amid the coronavirus pandemic and a slide in the price of crude oil, Norway’s biggest export.
“Norges Bank is continuously considering whether there is a need to intervene in the market by purchasing Norwegian kroner,” it said, in an announcement that lifted the currency to 12.8340 as of 1030 GMT.
The central bank declined to say how or when it would inform markets of any crown purchases it makes, with a spokesman saying: “We have nothing more to say at this time.”
Danske Bank’s Jullum said on Twitter that the central bank should buy heavily and refrain from announcing the volume of its interventions.
“One advice: please don’t say how much per day, per week, etc or how much altogether, or what is the target for the NOK. Just go into the market and buy crowns, quietly, and by the bucketful,” he wrote.
Norges Bank last intervened in the crown in January 1999, when its official goal was to keep the currency in a narrow band against those of its trading partners.
In 2001, the central bank’s mandate switched to an inflation target, and the currency has since traded freely, even during the volatile months of the 2008-2009 financial crisis.
“In 2009 the central bank said that intervening to strengthen the NOK was not a credible strategy over time. But they can intervene if they see big, short-term movements, for instance due to reduced liquidity in the market,” tweeted Handelsbanken Chief Economist Kari Due-Andresen.
Norway has huge foreign currency reserves, including the world’s largest sovereign fund – worth $880 billion as of Thursday – although its value has tumbled from $1.17 trillion on Feb. 13 as global stock markets plunged.
(Reporting by Terje Solsvik and Gwladys Fouche; Editing by Alex Richardson and Hugh Lawson)
