EURNOK is the ticker symbol for the euro to Norwegian krone exchange rate. EURNOK is an exotic currency pair because one of its constituent currencies is that of an emerging nation, Norway. Exotic currency pairs typically feature low trading volumes, overall illiquidity and are traded with relatively higher spreads than major currency pairs.
In the EURNOK Forex rate, the EUR is the base currency, while the NOK is the quote currency. Thus, the price of EURNOK at any given time represents the amount of Norwegian krone it would take to exchange for one unit of the euro (1 EUR to NOK).
History of EURNOK
The EUR to NOK pair combines two European currencies with contrasting histories and influence in the global economy. The euro is the 2nd most traded currency globally, whereas the Norwegian krone is the 14th most traded (as of March 2022).
Introduced in 1999, the euro is the official currency of the Eurozone, a monetary union of 19 of the 27 nations of the European Union. The introduction of the euro was the culmination of the 1992 Maastricht Treaty that laid the European Union’s foundation and provisions for a common currency. The euro has largely been hailed as a success. It has eliminated exchange risk and promoted peace, trade, tourism, and investment within the Eurozone. But there have also been critics, notably the UK, that have since left the EU entirely. The euro has also been criticized for favouring pro-German policies at the expense of smaller economies and formulating and implementing rigid monetary policies that sometimes do not fit the needs of other local economies. Still, the euro is now an influential and powerful currency in the global economy. It is second only to the US dollar, and at least 22 countries have pegged their national currencies to the common currency. Some of the largest economies of the Eurozone include Germany, France, Spain, Italy, and the Netherlands.
On the other hand, the Norwegian krone was introduced in 1875, replacing the Norwegian speciedaler. Krone translates to ‘Crown’ in English. At inception, the Norwegian krone was exchanged at a fixed rate of 1 Speciedaler = 4 Krone. This move saw Norway join the Scandinavian Monetary Union alongside Sweden and Denmark. The NOK has been pegged to numerous assets and currencies such as Gold, the British pound, the German reichsmark, and the US dollar.
Nonetheless, since 1992, the NOK has freely floated in the markets. Norway is one of the world’s wealthiest economies and boasts a high standard of living for its citizens. The country’s economy is highly advanced and supported by a large state sector, shipping, oil and gas, fisheries, hydroelectric power, and manufacturing. Norway exited the EU in 1994, but it has maintained positive trade relations with the economic bloc. The wealth of Norway’s natural resources has sometimes seen the NOK trade in the same manner as ‘commodity dollars,’ with the prices of commodities (especially crude oil) influencing sentiment.
EURNOK Historical Price Performance
The EUR/NOK exchange rate was around 8.19 at the turn of the millennium. After a period of sideways trending, the pair broke lower, tumbling to lows of around 7.22 by January 2003. It quickly recovered to highs of circa 8.80 by February 2004, going on another sideways trend until mid-2008, surging upwards and reaching highs of 9.95 by the end of that year. It would, however, embark on a downtrend that saw the pair trade below 7.30 by August 2012. It then entered a long-term rally that peaked above 12.30 in March 2020. The subsequent market correction has seen the pair trade around the 9.50-region in March 2022.
Major Bodies Influencing the EURNOK – EUR to NOK Trading
Here are some factors to consider when engaging in EUR/NOK trading:
The European Central Bank (ECB)
The ECB is the central bank of the Eurozone. To bank is mandated to ensure price stability within the region. The ECB sets its bank rate every month and releases its monetary policy stance to achieve this. These events are very impactful on the euro. The ECB can also participate directly in the market, as evidenced by its current quantitative easing programs that have seen the bank acquire assets.
Norges Bank is the central bank of Norway. It is mandated to achieve price and financial stability and efficiently manage the Pension Fund on behalf of the Government of Norway. The bank releases its policy rates eight times a year and its Monetary Policy Report four times a year. These events typically have a high impact on the NOK.
Statistics Norway is the main producer of national statistics in the country. It is responsible for collecting, producing, and publishing statistics related to the economy, population, and life at all levels. Some of the agency’s most important indicators that may impact the NOK include the GDP, Consumer Price Index, Average Wages, and Unemployment.
Positively correlated pairs typically move in the same direction, whereas negatively correlated pairs move in opposite directions. Correlations help traders identify unique opportunities and limit their risk exposure in the markets. The EURNOK has positive correlations with pairs such as the GBPNOK, GBPCAD, EURCAD, and EURAUD. The pair has negative correlations with the AUDSGD, AUDCHF, NZDJPY, and AUDJPY.
** Disclaimer –While due research has been undertaken to compile the above content, it remains an informational and educational piece only. None of the content provided constitutes any form of investment advice.