The Norwegian economy is relatively robust, leaving many EU countries behind in terms of GDP. Nevertheless, the national currency of this Scandinavian country is volatile. To understand its key features, let’s trace back its history.
The Norwegian krone was introduced in 1875. At that time, Norway joined the Scandinavian Monetary Union. The date of its foundation is 1873. We should note that the organization has existed for a long time, until the end of World War II.
The Norwegian krone consists of 100 shillings made of various alloys, including silver, gold, and bronze. The bronze coins had the lowest value. The value of silver ones was 10-50 shillings and even 1-2 Krones. As for gold, this metal was used to issue 10 and 20 Krones. The 2-krone coins had been being published until 1917. Then, 1 and 2 shillings were excluded from circulation in 1972. The 10- and 20-shilling coins had been being removed from circulation until 1992. 1877 is the date of the introduction of paper banknotes. Their denomination included 1000, 500, 100, 50, 10 and five Krones. Then, coins replaced five as well as 10 NOK banknotes.
Norway has been exploiting the gold standard monetary system for a long time. The Scandinavian country shifted to the Jamaican system much later than other European nations. The success of this state can be explained by an efficient banking system as well as an excellent administration of state assets. As for the Norwegian economy, it’s mixed. However, most of the large industry is public.
The currency pair USD/NOK indicates the value of the evergreen buck, expressed in Norwegian Krones. Of course, the scale of the two economies can’t be compared. What’s more, you should also keep in mind that the American economy initially developed in compliance with the classical model. Norway’s currency evolved differently.
The evergreen buck is the key reserve currency now. It’s used to make most international payments. It’s also the most liquid currency in the Forex market. Only the euro can compete with the greenback in this regard. In the United States, the national monetary policy is regulated by the Federal Reserve. The major bank can change the interest rate and also take other measures to underpin the greenback.
The Norwegian economy is heavily reliant on commodity prices. Crude prices mainly influence the currency pair USD/NOK. Norway turns out to be the largest exporter of oil in the European Union and worldwide.
Any changes in oil quotes are instantly reflected in this pair. The increase in the value of this commodity has a positive effect on the Norwegian currency. Respectively, the dive in crude prices hurts this asset. The Norwegian krone can be defined as a peripheral currency. By the way, during periods of high USD/NOK volatility, a significant number of traders shift their assets to other assets. Of course, such a situation depreciates the Norwegian currency.
Use both technical and fundamental analysis to trade this currency pair successfully. You should pay much attention to Norway’s GDP, unemployment rate, crude prices, not to mention the interest rates of the two countries.