Since the turn of the year, the krona has been gradually strengthened against both the dollar and the euro. On Monday, the Swedish currency rushed heavily-and outclassed several of its competitors in the G10 group.
At the time of writing, the euro costs SEK 11.03 while the dollar is traded for 10.52.
One explanation for the development is that the krona has sailed as a favorite among investors after Europe promised a comprehensive military renovation, reports Bloomberg.
Several factors to the lift
Sweden’s defense industry is predicted to be one of the winners of the investments. In terms of proportion of GDP, Swedish arms exports – which have grown by 7 percent since 2020 – are among the largest in the Western world.
– We have an interesting defense industry and when it grows in Sweden it gives rings on the water and spread effects to larger parts of the economy, says Robert Bergqvist, senior economist at SEB, to TV4 News.
He emphasizes that there are two more reasons for the Crown Lift. On the one hand, Sweden has strong government finances, which provide maneuvering space to stimulate the domestic economy, and on the other, the Riksbank is very clear with its interest rate cuts.
At the same time, Robert Bergqvist points out that the crown is still weaker than it should be.
– If I look at what the krona is traded at for, for example, the dollar, then it has been traded at about 25 percent discount.
Strategists state for Bloomberg that the krona may be strengthened another 2.5 percent against the euro during the year. Robert Bergqvist also has good hopes that the trend will last.
– Exactly when the crown reinforcement is to occur is difficult to say. But I think the direction of travel is very given, that is, the crown will be strengthened in the future.
The pitfalls for the crown
In that case, it is good message – on several levels.
– We will notice if we travel abroad this summer that we will get more for our money.
A stronger krona also means that the price increases for food are muted, Robert Bergqvist points out.
– We get more money in the household cash when we go shopping and I think that can be very important for many households.
But there are a number of things that can set the hook for the crown’s progress. The security situation risks being deteriorated further and the trade war can escalate. In addition, there is political and economic uncertainty in Germany and the United States, which are important trading partners to Sweden.
– This can change the playing field very quickly.