Krona (SEK) Strength Poses No Danger to Swedish Economic Growth

Published: 8 Apr at 1 PM Tags: Euro, America, Eurozone, USA, Norway, Sweden, Switzerland,

Although some industry experts have expressed concern that the Krona’s newfound strength will make Sweden less competitive than its major trading partners, others have argued that the currency’s rise is not placing the nation’s economic growth in danger.

As the financial crisis in the Eurozone has bounced from issue to issue the Krona has attracted investors looking for a safer asset. The Krona has also benefited from projections which outline the Swedish economy rebounding, as it recovers from a decline in exports which saw growth ease from 3.7 per cent to just 0.8 per cent in 2012.

Both Sweden’s Prime Minister Fredrick Reindfeldt and the Governor of the nation’s central bank have adopted a non-interventionist stance when it comes to the exchange rate, setting them apart from the leaders of Switzerland and Norway.

Now the head of a major Swedish state-owned export credit provider has argued that the Krona’s strength will aid the nation’s export industry in the long term.

Peter Yngwe, who takes the same stance as Reindfeldt and Riksbank Governor Stefan Ingves regarding the exchange rate, was recently quoted as saying: ‘The Swedish export industry is good at being effective and streamlining and in the long term that’s the right way to go. In the short term it’s, of course, tough with a strengthening Korna. [But] the Krona is starting to return to a level where it was before, so fundamentals support that it’s about at the right level.’

When asked about companies like Svenska Cellulosa AB, which has argued that competitiveness is being lost because of the Krona’s strength, Yngwe did acknowledge that various industries may be affected differently. He commented: ‘Of course, those companies more focused on raw materials, forestry and mining are affected a lot by this, but the processing industry not as much.’

In the last year the Krona has gained by roughly 5 per cent against the Euro.

It is currently trading in the region of 8.3504 Krona per Euro.

As of Monday, 8th April 2013, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1722, GBP USD exchange rate was 1.5259, GBP NOK exchange rate was 8.7554, and GBP CHF exchange rate was 1.4267.

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