What Is the Norwegian Krone (NOK)?
The Norwegian krone (NOK) is the official currency of Norway. NOK is its abbreviation for foreign exchange transactions in pairs, such as USD/NOK for trading U.S. dollars against the Norwegian krone.
- The Norwegian Krone (NOK) is the national currency of Norway.
- The krone has been the primary currency used in Norway since 1875.
- The USD/NOK pairing is the 14th most traded currency in the forex markets.
Understanding the Norwegian Krone
The Norwegian krone is the official currency of the nation of Norway. The word krone translates to crown in English.
A single unit of the currency is called a krone, while the plural form, also spelled krone, is pronounced "KRO-nuh" or "KRO-ner." A krone is made up of 100 Øre (pronounced "UH-ray").
The krone is among the 15 most traded currencies in the world. It has close correlations with the neighboring Swedish krone (SEK) and the Danish krone (DKK). Traders once expected the value of the krone to be closely correlated with the price of oil. In fact, the krone now has a tighter correlation with the euro currency than with the price of oil or even with the other Scandinavian country currencies.
Banknotes feature prominent Norwegians such as noted scientists and artists on the front of the currency, along with information indicating the specific person’s contribution to Norwegian culture. The back of each bill depicts some aspect of Norwegian art. For example, the 50-krone note contains a green tint, a portrait of Peter Christen Asbjørnsen on the front, and an artist’s rendering of Asbjørnsen’s story A Summer Night in Krogskogen.
History of the Krone
The krone replaced the Norwegian speciedaler at a rate of four kroner to one speciedaler in 1875 when Norway joined the Scandinavian Monetary Union. The union was dissolved in 1914, but Norway continued to use the krone as its own currency—the Norwegian krone.
In 1940, during the nation's occupation by Germany, the krone was fixed to the German reichsmark. It remained fixed to Germany's currency until 1992, although the level at which it was fixed fluctuates from time to time. Under mounting pressure from those betting against the krone, the central bank of Norway floated the nation's currency and it remains floated today.
Because Norway is not part of the European Union, the euro is not the primary currency used in the country. In Oslo, the capital city, U.S. dollars or euros are accepted at some stores, but most transactions require krone.
Norway's central bank has issued a total of eight series of banknotes, including the October 2018 issue of new 50-krone and 500-krone bills. Consumers could no longer use the 50-krone and 500-krone banknotes from the previous series after 18 October 2019.
Norway's Economy and the Krone
Large deposits of petroleum were discovered in Norway in 1969, leading to a period of prosperity that lasted even through the "stagflation" period of the 1970s. Today, Norway, with its population of just 4.6 million people, remains one of the world's wealthiest nations.
Norway's economy is reliant on the oil industry, so the krone is at times correlated to the price of crude oil, though there have been surprising periods of a year or more when they have not been correlated.
During the oil crisis of 2015, the krone reached its lowest level since 2002, falling 20% against the U.S. dollar in a period of five months from October 2014 to February 2015. That low eclipsed even its bottom during the Great Recession.
The krone remains highly correlated with its Scandinavian neighbors, the Danish krone and the Swedish krone, and to a lesser degree with the Canadian dollar and the British pound, other currencies which tend to fluctuate with the price of oil.