Baltic crisis puts pressure on krona
TT/The Local · 8 Jun 2009, 14:51
Published: 08 Jun 2009 14:51 GMT+02:00
The uncertain situation affecting Baltic financial markets has a direct impact on the krona, according to Lars Christensen, an analyst at Danske Bank, who pointed out that Swedish banks have outstanding credits of up to 500 billion kronor ($63.4 billion) in the region.
Christensen added that the krona is also being battered by the general aversion to risk on the currency markets and as a result of stock market falls.
The krona dipped to 10.98 kronor per euro by lunchtime on Monday but quickly recovered to 10.94.
Against the dollar the krona fell to 7.91 by 1pm, down from 7.77 on Friday.
"Risk aversion on the markets is normally negative for the Swedish krona. But the Baltic effect persists, there is no doubt about that. Both for the Swedish krona and for the eastern and central European currencies," Christensen said to news agency TT.
The Latvian central bank has been forced to spend 237.3 million euros ($329.2 million) shoring up the country's currency over the past week in an attempt to arrest the slide against the major currencies.
The bank's monetary policy is aimed at preparing the country for the adoption of the euro within 3-4 years; a policy that has been put under scrutiny as a result of the deep recession and financial crisis that has affected the country.
Lars Christensen is among those waiting on a decision by creditors including the IMF, the EU and Sweden, which is expected in the beginning of next week.
"It would be very positive for the krona if they were to secure an IMF payment. That would solve the short term financing problems anyway," he said.
Clarification: An earlier version of this article incorrectly asserted that the krona had fallen to a record low against the euro.