Norway’s economy is powerful enough. In this regard, it outperforms many European nations. Despite this fact, the Norwegian krone is an unstable currency.
In 1875, Norway became a member of the Scandinavian Monetary Union. At that time, the Norwegian krone was introduced. By the way, that organization existed until the end of World War II.
One hundred shillings are equal to one Norwegian krone. The coins were made of such allows, like bronze, gold, and silver. Of all currencies, the bronze ones had the lowest value. 10-50 shillings, as well as 1-2 Krones, were made of silver. Gold was utilized to issue 20 and 10 Krones. The 2-krone coins were in circulation until 1917. They were no longer in circulation in 1972. As for 10- as well as 20-shilling coins, they left to flow in 1992. Paper banknotes with denomination of 5, 10, 50, 100, 500, 1000 Krones appeared in 1877. Then 10 and 5 notes were replaced by coins.
The gold standard monetary system was used in Norway for a long time. Norway moved to the Jamaican system later than other European countries.
The economic success of this Scandinavian country can be explained by a proper administration of state assets and a productive banking sector. The country’s economy is mixed, although the state controls its most significant portion.
The currency pair USD/NOK shows the value of the US dollar, denominated in Norwegian Krones. Indeed, the scale of the two economies is different. Moreover, the US economy initially evolved according to the classical model. As for Norway’s currency, it had an alternative development.
The USD is currently a significant reserve currency widely utilized for international payments. Moreover, it leads in terms of liquidity. Only the common currency can compete with the US dollar in this regard. In America, the national monetary policy is regulated by the Fed. The major financial institution has the right to change the interest rate and take other measures to back the US dollar.
The Norwegian economy heavily depends on commodity prices. Crude prices greatly influence the currency pair USD/NOK. Norway is the number one oil exporter in the European Union and the entire world.
Any fluctuations in oil quotes are instantly reflected in this currency pair. The rally in the value of this commodity has a favorable effect on the Norwegian krone. Accordingly, the tumbled in oil prices hurts this asset. The Norwegian currency can be defined as a peripheral asset. We should note that during periods of high USD/NOK volatility, many investors move their assets to other assets. This situation puts pressure on the Norwegian krone.
You can hardly derive benefits from this currency pair without fundamental and technical analysis. Carefully watch the country’s unemployment rate, GDP, oil prices, to say nothing of the interest rates of Norway and America.