NOK/DKK

Currencies // Developed Markets

• Background

  The Norwegian krone (NOK) is the currency of Norway and one of the top ten traded currencies on the foreign exchange market. The Norwegian krone was introduced in 1875. In doing so the country joined the Scandinavian Monetary Union with Denmark and Sweden. In 1914 the union broke up and each of the Nordic kingdoms kept the name krone but created their own separate currencies. The Danish krone or crown (DKK) is the currency of Denmark as well as Greenland and the Faroe Islands. It is pegged to the euro via the European Exchange Rate Mechanism after the Danish government negotiated an opt-out in 1999, when other countries joined the euro. The government in Copenhagen is currently committed to eventually joining the euro, but does not have the support within the country to do so. The Norwegian krone was fixed until 1992 when the Norges Bank floated the currency in a managed float after a run on the currency. The Norwegian krone is viewed as a petro-currency as it fluctuates quite considerably in line with the price of oil.

• Influencing Factors

  Factors affecting the value of the Norwegian currency are economic indicators including the level of interest rates, trade balance, unemployment, price inflation and GDP. The value of Norway’s currency is also affected by the price of coal and gas as well as oil. Other influencing factors are base metal prices for its shipbuilding industry. Factors affecting the value of the Danish currency are economic indicators including the level of interest rates, trade balance, unemployment, price inflation and GDP. The value of this currency is also affected by the price of coal and oil and other commodities like base metal prices because Denmark has to import all its raw materials.