Norway’s currency, the Norwegian krone (NOK), has a fascinating history stretching back centuries. As an oil-rich nation with a robust economy, the krone plays an important role both domestically and on the global financial stage. This in-depth guide will cover everything you need to know about the Norwegian krone – from its origins and design features to exchange rates, economic impacts, and trading strategies.

A Brief History of the Norwegian Krone

Origins and Early Adoption

The krone has been the currency of Norway for over two centuries. Its origins date back to the establishment of the Scandinavian Monetary Union in 1873, which introduced a new common currency for Norway and Sweden called the “krona.” This replaced the previous “speciedaler” and “spesidaler” currencies.

Prior to the union, Norway used various forms of currency including riksdaler, speciedaler and skilling. Adoption of the new krone was gradual, becoming the sole legal tender by 1875. The name “krone”, meaning crown, reflects Norway’s status as an independent kingdom at the time.

The Gold Standard and WWI

In line with many world currencies, the krone operated under the gold standard from 1873 to 1914. Banknotes were freely convertible into gold coins. This changed with the outbreak of World War I in 1914, forcing Norway to leave the gold standard. Restrictions were imposed on the export of gold coins and the krone became inconvertible.

Bretton Woods System and Post-War Period

After WWII, Norway signed the Bretton Woods Agreement in 1945 which pegged global exchange rates against the US dollar. As a result, the krone exchanged at a fixed rate of 7.14 NOK to 1 USD. This provided currency stability up until the breakdown of Bretton Woods between 1968-1973.

Subsequently, the krone fluctuated against major currencies based on market supply and demand. Deregulation of currency markets worldwide meant increased volatility for the Norwegian krone exchange rate.

Krone Banknotes and Coins

Current Banknotes

Norwegian krone banknotes are issued by Norges Bank, the country’s central bank. They are colorful and feature prominent Norwegian figures, landscapes, and architecture on the reverse. The obverse displays the portrait of King Harald V.

The denominations in circulation are 50, 100, 200, 500 and 1000 kroner. Security features include holograms, watermarks, see-through registers, fluorescent printing under UV light, tactile marks for the vision impaired, and more.


Circulating coins for the krone include 1, 5, 10 and 20 kroner. Made from Nordic gold, an alloy of copper, zinc, aluminium and tin, the obverse has numerals encircled by a wreath, coat of arms, and inscription.

The 5 kroner reverse features an Atlantic puffin, while the 10 and 20 kroner show a fishing vessel and a Viking ship respectively. The 1 krone reverse is decorated with a salmon. A new bimetallic 50 kroner coin was also issued in 2020.

Commemorative Coins

The Royal Norwegian Mint produces special commemorative coins celebrating key events, people, and landmarks. Recent issues honor Edvard Munch’s iconic painting The Scream as well as the 200th anniversary of Norway’s constitution. Made of silver or gold, they have high collectible value.

Cashless Payments

While banknotes and coins remain in circulation, Norwegians predominantly use cashless payments including credit cards, mobile apps and online banking. The krone is the legal tender, whether in physical or digital form.

NOK Exchange Rates, Policy and Performance

 Exchange Rate Regime

Norway’s exchange rate policy has evolved over the decades. Currently, the krone floats independently, with its value determined by forex markets based on supply and demand relative to other currencies like the US dollar, euro, and British pound.

The central bank can intervene at times to stabilize excessive volatility in the krone’s value, but there are no fixed pegs or narrow trading bands. This flexible regime gives monetary policymakers more autonomy in setting interest rates.

Factors Influencing Exchange Rates

As a commodity currency, the krone is heavily dependent on oil exports which constitute over 40% of Norway’s total exports. Crude oil prices significantly impact the NOK exchange rate. The krone appreciates when oil prices are high, while falling oil leads to depreciation.

Other factors include Norway’s strong fiscal position, inflation, interest rate differentials, current account surplus, investment flows, and broader risk sentiment that drives demand for safe havens like the Swiss franc. Economic performance of main trading partners such as the EU also affects NOK rates.

Historic Highs and Lows

At its peak in 2013, NOK traded at 5.86 per USD amid surging oil prices. The lowest exchange rate came in 1986 when NOK fell to 8.82 per dollar following a collapse in oil revenues. The average exchange rate over the past decade is 7.04 NOK per USD.

Recently, the krone depreciated to significant lows against both the dollar and euro during the 2020 Covid-19 pandemic as oil demand plummeted. However, the NOK has since rebounded on recovering oil markets.

Monetary Policy and Central Banking

Norges Bank

Norges Bank serves as the central bank and monetary authority in Norway. Established in 1816, it is the oldest central bank globally tasked with a range of responsibilities including implementing monetary policy, promoting financial stability, managing bank reserves, and operating key payment systems.

Headquartered in Oslo, Norges Bank is governed by six executive board members and a supervisory council appointed by Norway’s parliament. While politically independent, the bank is accountable to the government.

Mandate and Tools

The bank’s mandate is to maintain a stable currency value while also boosting employment and the economy. Policy is centered on an inflation targeting regime, with a target of 2% CPI inflation over the medium term.

Key monetary policy tools include benchmark interest rates, bank reserve requirements, quantitative easing via bond purchases, and foreign exchange interventions when necessary. Interest rate decisions are taken by the executive board led by the governor.

Current Monetary Policy

To curb rising inflation currently above 5%, Norges Bank has embarked on a hiking cycle, raising rates steadily from near zero to 2.25% as of September 2022. Further tightening is expected to stabilize prices. The krone has correspondingly appreciated strongly this year on increased rate differentials versus trading partners.

Overall, prudent monetary policy has anchored inflation expectations and limited currency volatility over time compared to other global currencies. This upholds public confidence in the krone.

Krone in Economic Context

Currency Composition of Foreign Reserves

As of 2022, the Norwegian krone comprised just 0.1% of global foreign exchange reserves according to IMF data. By contrast, the US dollar and euro accounted for nearly 80% of reserves. The minor allocation towards NOK reserves reflects its relatively small role in global trade and financial flows.

Currency Composition of Norwegian Reserves

Norway holds its substantial foreign exchange reserves primarily in dollars (35%) and euros (45%). This includes proceeds from oil exports and the country’s sovereign wealth fund. Only 13% were held in Norwegian krone as of Q1 2022. This diversification brings stability and liquidity.

Use in Global Trade and Finance

The krone has limited international use beyond Norway’s borders. Given the economy’s reliance on oil exports, most global trade transactions are denominated in dollars or euros. NOK accounts for less than 1% of daily global foreign exchange turnover based on BIS data.

As an internationally oriented economy reliant on imports, Norway prefers using major global currencies over the krone for international payments and investment. However, the NOK still plays a vital role domestically.

The Krone for Traders and Investors

Trading the NOK Forex Pair

The NOK currency pair is traded heavily by forex traders seeking to profit from fluctuations in the Norwegian krone exchange rate against other major currencies. The NOK/USD and NOK/EUR are two common pairs.

Factors like changing oil prices, interest rate differentials, and Norway’s economic outlook compared to the US or Eurozone drive exchange rate moves traders look to capture in their positions. The NOK acts as a petrocurrency, appreciating when oil markets are strong.

Hedging Exposure to the Krone

Many corporations and institutional investors with significant business activities in Norway but revenues in foreign currency have exchange rate risk from the fluctuating krone. Options, forwards and futures contracts denominated in NOK are common hedging tools.

Portfolio managers may hedge NOK exposure in their international or bond fund holdings related to Norway using currency derivatives or allocating to hedged share classes to minimize volatility.

Impact on Equities and Fixed Income

A stronger krone tends to hurt Norwegian exporters as their goods become more expensive abroad, weighing on equities. The opposite occurs when NOK weakens. For fixed income, a stronger krone reduces imported inflation, enabling lower interest rates which boosts bond prices.

Overall, the NOK exchange rate has major implications for Norwegian financial markets beyond just forex trading.


In summary, as Norway’s national currency for over 140 years, the Norwegian krone has a rich history intertwined with the country’s economy and global developments. Its flexible exchange rate, prudent monetary policy, and sensitivity to oil prices characterize the krone’s behavior. For traders, hedgers, and investors worldwide, understanding the driving forces behind NOK price swings is key to navigating Norway’s currency.