Analysts and economists tracking the Norwegian central bank say a period of unclear guidance from policy makers has exacerbated a surge in Krone volatility as liquidity dries up.
"A lot of people have had a hard time interpreting Norges Bank in the past year," Magne Oestnor, a currency strategist at DNB ASA, Norway's biggest bank, said in an interview.
"Many have speculated in a stronger Krone and taken losses after fast and sharp movements in the past months."
Since the beginning of June, Norway's krone has seen the biggest surge in one-week implied volatility versus the euro of the major currencies tracked by Bloomberg.
The period includes a sudden Krone selloff after Norges Bank cut its main rate to 1pc on June 18 and surprised markets by signalling more may follow. The news sent the krone down 2pc against the euro on the day.
Norway's Krone can drop "brutally fast" because it trades in such a small market, Mr Oestnor said. "It's hard to get prices - and get good prices - even if you have stops, you're not guaranteed a trade."
Krone volatility has spiked as markets grow more focused on liquidity. These days, investors are more interested in deep markets than they are in stellar credit ratings.
With the Federal Reserve preparing to raise US interest rates, investors want to know they can sell in a hurry if debt and currency markets turn volatile. The Krone rose as much as 0.8pc yesterday and was trading at 8.7484 against the euro as of 12.46pm in Oslo.
It's still the biggest loser over the past year of the 10 currencies tracked in the Bloomberg Correlation Weighted Index.