Post History

Are Icelandic unstressed diphthongs in loanwords supposed to be reduced?

In Icelandic, certain accented vowel letters (especially ó, á) are consistently explained as diphthongs ([ou] and [au], respectively) in pronunciation guides.

Accented vowel letters are also encountered in many loanwords, perhaps to emphasize the foreign origin of a particular vowel.  This frequently includes "ó". For example: 

* "apótek" (pharmacy; the loanword competes with a domestic synonym)
* "sólkóróna" (sun corona)
* "Indónesía"

The source languages, as far as I can tell, did not supply those accents in any way that would be obvious to me.  It´s something to do with Icelandic itself.

Wherever such a foreign "ó" occurs in an unstressed syllable, I find it reduced from [ou] to [o] in native pronunciation.  For example, "sólkóróna" would be pronounced [soulkorona], while "kóróna" would be pronounced "kourona".

I often even find the same online resource giving the pronunciation transcribed as [ou], accompanied with a recorded careful native pronunciation that has a monophthongal [o].  (Example - [hvalur.org for apótek](https://hvalur.org/search.php?d_h_d=ap%C3%B3teki).)

1. Is the monophthong just in my own ears, or is this reduction a well-documented phenomenon?
2. Is the reduction obligatory?  And when exactly?
3. Can anyone provide examples or counter-examples for any other diphthongs, such as á, æ, au, ei or é?  
(Note: such examples are somewhat hard to come by.  Only unstressed syllables in foreign morphemes would qualify.  The closest I was able to find was "Kristján", which is a very common first name within Iceland, is surely pronounced with the due diphthong.  Likewise - "milljón" gets its corresponding diphthong, at least in dictionary-like contexts.  Perhaps neither of those is perceived as a foreign word in Icelandic, or perhaps there are other factors at play.)
4. Why are so many loanwords receiving Icelandic-specific accents (á, é, í, ó, ú, ý) anyway?  How are those accent marks supposed to interact with the pronunciation?