Krona Rises to Near 12-Year High as Riksbank Seen Hands Off
Sweden’s krona rose to the highest level against the euro since December 2000 amid speculation the central bank won’t act to halt gains in the currency of the largest Nordic economy.
The krona, the best performer against the euro in a basket of major currencies, gained as much as 0.9 percent to 8.4781 and traded at 8.4899 as of 1:43 p.m. in Stockholm.
The Riksbank this month kept its benchmark interest rate unchanged at 1.5 percent and estimated the krona will strengthen 4.5 percent against the currencies of its main trading partners in the next 12 months. Governor Stefan Ingves said in minutes of the meeting released yesterday that the krona may strengthen “given the economic developments in Sweden.”
“The minutes yesterday showed that the Riksbank is one of the few central banks not concerned about currency strength,” said Henrik Gullberg, a foreign-exchange strategist at Deutsche Bank AG in London.
The krona, which has emerged as a haven for investors looking to escape the debt crisis in the euro area, has risen 5.2 percent against the euro so far this year. It has lost 0.8 percent against the dollar during the period.
Credit-default swaps on Swedish debt signal the country is safer than Germany, with the five-year contracts trading at 49.68 basis points. This compares to 47.49 basis points for the equivalent U.S. contract and 75.51 for German debt.
Sweden’s economy, which gets about half its output from exports, 70 percent of which go to Europe, will expand 1.1 percent this year and 3 percent next year after growing 3.9 percent in 2011, the government estimates. This compares with a 0.3 percent contraction in the euro area this year and 0.7 percent growth in 2013, according to International Monetary Fund estimates.
-- With assistance from Lucy Meakin in London. Editors: Jonas Bergman, Alastair Reed
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