Sweden’s Borg Welcomes Krona Losses Amid Shaky Global OutlookJohan Carlstrom
Sweden’s Finance Minister Anders Borg said he welcomes a weaker exchange rate after the krona plunged to its lowest level against the euro in almost a year.
The currencies of Sweden and Norway suffered a sell-off last week that continued through yesterday following signals from the U.S. Federal Reserve it will scale back stimulus. The Swedish krona fell 1.9 percent against the euro in the week through June 21, and yesterday sank as much as 1.6 percent to its lowest per euro since June 18, 2012.
“I don’t mind the krona weakening a little bit when we see problems in the world economy,” Borg said today in a phone interview with Bloomberg Television’s Francine Lacqua and Guy Johnson. “We don’t have a strong krona policy. We believe that the market should set the rate and it should reflect fundamental values of the economy.”
The krona’s decline marks a reversal of its popularity among investors earlier this year after AAA rated Sweden emerged as a haven from the debt crisis in the euro zone. A 31 percent krona appreciation from the end of 2008 through the middle of March this year prompted Swedish policy makers to warn the currency’s strength may warrant some concern.
“A strong krona is of course a problem to the export sector,” Financial Markets Minister Peter Norman said in a separate interview today.
Almost 70 percent of exporters in the largest Nordic economy said the krona’s strength at the end of May was hurting their business, according to a survey published yesterday by the state-owned Swedish Export Credit Corporation. Half of Sweden’s economy comes from exports, of which about 70 percent are destined for Europe.
The krona gained 1 percent against the euro today and traded at 8.7812 as of 12:08 p.m. in Stockholm.
“We have a free float, but I don’t mind if the krona weakens a little bit and helps our economy,” Borg said.