Sweden’s krona weakened the most in two weeks against the euro after Finance Minister Anders Borg said he’s unsure if the krona’s strength will last and that there may be “exaggerated confidence” in the currency.
The krona weakened as much as 0.5 percent against the euro to 8.3353, the steepest retreat since Feb. 21, and was trading at 8.3151 per euro at 3:50 p.m. in Stockholm. It softened 1.3 percent to 6.4073 against the dollar and weakened against all major currencies apart from the Japanese yen in a basket compiled by Bloomberg.
Borg said recent krona appreciation may be due to short-term investment flows and that “considerable” risks remain in Europe.
“Should we see a return of political turmoil in Italy for example it’s very uncertain what effect that will have,” Borg said after a hearing in parliament in Stockholm. “It could then very well turn out that” the market has “an exaggerated confidence in the krona.”
Sweden’s currency has appreciated over the past month after economic data has suggested the Nordic country’s recovery is gaining pace and as policy makers signal they won’t interfere with its gains. It strengthened to a six-month high against the European common currency yesterday after Riksbank Governor Stefan Ingves said its current level was “not in any way remarkable” and the krona is at about the level it ought to be.
The krona started the day’s retreat after data from Statistics Sweden showed industrial production fell more than estimated in January, RBC Capital Markets said in a note to clients.
Swedish consumer confidence improved for a second month in February, while data from the Public Employment Service today showed the non-seasonally adjusted unemployment rate declined to 4.7 percent in February, from 4.8 percent the previous month.