What Is the Currency of Norway?

By Zainab Reza on August 17 2017 in Economics

Norwegian krone coins and banknotes.

Officially known as the Kingdom of Norway, Norway is a unitary monarchy and a sovereign state. Norway has a population of 5,258,317 and its territory includes the western part of the Scandinavian Peninsula, as well as the remote island of Jan Mayen and the Svalbard archipelago.

The official currency of Norway and its dependent territories is the Norwegian krone (plural kroner), which uses the sign kr and the code NOK. The name of the currency basically translates into English as “crown.” The currency is subdivided into 100 øre, which have existed solely on an electronic basis since 2012. As of April 2010, the krone was ranked as the 13th most traded currency in the world. Its ranking had dropped down three positions from 2007.

History of the Norwegian Krone

The krone was initially introduced back in 1875, and replaced the Norwegian speciedaler, and it was valued at 1 speciedaler being equal to 4 kroner. This paved the way for Norway to become part of the Scandinavian Monetary Union that was created in 1873. The union was dissolved in 1914, after which the former member countries chose to keep the names of their respective currencies. These included Sweden, Norway and Denmark, and since then, all these countries have had their separate currencies.

Between 1916 and 1920, and again in 1928, the krone held a gold standard of 1 kilogram of pure gold = 2,480 kroner. However, the standard was brought to a permanent ban in 1931, and the krone was instead pegged to the British pound, at a rate of 19.9 kroner to 1 British pound. In 1939, the krone was temporarily pegged to the US dollar at a rate of 4.4 kroner $1 US dollar.

Exchange Rates of the Norwegian Krone

Compared to the other currencies around the world, the value of the Norwegian krone tends to vary rather significantly on a year to year basis. This is associated with the fluctuations in interest rates and oil prices. The Norwegian krone reached record levels in 2002 against the United States dollar and the euro. For example, on January 2, 200, 100 kroner was worth 11.14 US dollars (8.98 NOK = 1 USD), and by July of the same year, 100 kroner were equal to 13.7 US dollars (7.36 NOK = 1 USD). The change is explained by high oil prices and and a 7 percent increase in the interest rate on July 4, 2002. At that time, Norway was considered the world's third largest oil exporter.

In early 2008, the US dollar started depreciating against all other major currencies across the world, which made the Norwegian krone stronger than in comparison to the USD. At this point, 1 USD became equal to 5 NOK. However, the USD recovered its worth by October 2008, and became worth 7 NOK. The NOK once again gained value in 2009, and 1 USD became equal to 5.8 NOK. Since then, the USD has recovered its value and has been standing at 8.5 NOK since mid 2016.

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