The Petroleum Fund's foreign exchange requirements are partly met by the state's direct financial interest in petroleum activities (SDFI) and partly by Norges Bank's purchases in the market.

The Ministry of Finance determines the size of the monthly allocations to the Petroleum Fund. Norges Bank's purchases of foreign exchange are equal to the difference between the allocations and SDFI's estimated foreign exchange revenues. Adjustments are made for any revisions of estimates for the previous month. As a result, the daily purchases may vary from one month to the next. The daily foreign exchange purchases are determined for a period of one month at a time and are published on the last business day of the preceding month.

Norges Bank will not purchase foreign exchange in March 2005. This is partly because the November 2004 allocation to the Petroleum Fund was substantially reduced. In addition, some of the SDFI's foreign exchange income in December 2004 was transferred to the buffer portfolio to minimise the Government's transaction costs. Norges Bank will continue to reduce the buffer portfolio in order to achieve the desired level by the end of March. See also the box in Inflation Report 3/04 for a more detailed description of the calculations.