NORWAY – The Norwegian central bank will buy the equivalent of around €1.6bn in foreign exchange for the Petroleum Fund in September.

“In September, Norges Bank will purchase foreign exchange equivalent to NOK580m per day for the Government Petroleum Fund,” the bank said.

Assuming 22 trading days in the month, that works out at a total of some €1.6bn.

In August the bank planned to buy the equivalent to NOK510m a day for the fund.

Speaking at an energy conference yesterday, Norges Bank governor Svein Gjedrem stressed the role of the Petroleum Fund in stabilizing the krone.

He said: “The Petroleum Fund acts as a buffer and dampens the wide fluctuations in the krone exchange rate that petroleum revenues might otherwise have generated.

“An increase in petroleum revenues will result in higher capital outflows from the Petroleum Fund. Operators in the foreign exchange market may at times have a tendency to underestimate the fund’s function as a stabilisation mechanism.”

He added that the capital outflows through the fund “contribute to both curbing the appreciation of the krone and maintaining its stability”.

Earlier this month the fund announced that it had funded two new fixed income and three new equities mandates in the second quarter.