Sweden’s Borg Vows to Give Riksbank Free Hands on Krona Policy
Sweden’s government distanced itself further from moves elsewhere across the globe to manipulate currencies by pledging not to interfere in the central bank’s exchange rate policy.
The stance is in contrast with efforts from France to Japan, where governments have pushed for monetary policy steps targeting exchange rates. In Japan, the government’s preferred candidate to take over as central bank governor has spoken in favor of additional stimulus measures.
“I would never dream of commenting on monetary policy,” Swedish Finance MinisterAnders Borg said in an interview in Stockholm today. “The entire responsibility for monetary policy and currency interventions is with the Riksbank.”
Sweden’s central bank Governor Stefan Ingvessaid in an interview last month the krona’s ascent is justified and has brought the exchange rate to a level he’s “happy” with. Sweden has distinguished itself as a nation unwilling to be dragged into so-called currency wars as governments elsewhere try to boost trade competitiveness through exchange-rate devaluations.
The krona gained as much as 0.3 percent against the euro and traded 0.2 percent higher at 8.3633 as of 12:30 p.m. local time. Versus the yen, the krona gained as much as 0.5 percent.
“In some other countries, governments and central banks share duties with respect to the exchange rate,” Borg said. Sweden’s decision to leave all monetary policy and currency decisions to an independent central bank is “very wise,” he said.
Comments by Ingves and other policy makers in the largest Nordic economy show that “Sweden will stay side-lined on any global currency war, being a lone rider among central banks in not viewing its currency as overvalued,” Danske Bank A/S (DANSKE) senior analyst Christin Tuxen said in a note today. “This lends support to our view that the krona is, if anything, slightly undervalued and should appreciate further from here.”
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