March 18, 2020 / 7:41 AM / 22 days ago

UPDATE 1-Norway central bank increases purchase of crowns to support state spending

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OSLO, March 18 (Reuters) - Norway’s central bank will increase its daily purchase of Norwegian crowns to 1.6 billion crowns ($152 million) per day from 500 million crowns earlier, selling foreign currency to secure funds for government spending, it said on Wednesday.

“The effects of the coronavirus outbreak on the Norwegian economy and the measures implemented to limit the consequences of the outbreak entail an increase in government spending and a decline in government revenues,” Norges Bank added.

In order to make funds available for the government’s fiscal budget, the central bank exchanges currency earned from the oil industry and its sovereign wealth fund into Norwegian crowns.

The planned daily amount of such purchases is regularly announced at the outset of a month and is not normally altered mid-month.

But a forced shutdown of a range of public and private institutions in recent days has resulted in a surge in unemployment, while government revenue is faltering.

“The government must therefore convert an increased share of petroleum revenue into NOK. Norges Bank is responsible for executing these foreign exchange transactions on behalf of the government,” the central bank said.

$1 = 10.5259 Norwegian crowns Reporting by Terje Solsvik, editing by Victoria Klesty and Jason Neely

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