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Baltic crisis puts pressure on krona

TT/The Local · 8 Jun 2009, 14:51

Published: 08 Jun 2009 14:51 GMT+02:00

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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.

Story continues below…

"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.

TT/The Local (news@thelocal.se)

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Your comments about this article

18:00 June 8, 2009 by obi
10.98 SEK/€ is NOT a record low, it was around 11.5 SEK/€ is early March, check RIksbank or ECB website to confirm.
21:19 June 8, 2009 by Jungle
Closing high in EURSEK (i.e. low in SEKEUR) was 11.6838 on 2009/03/05 and the all time high high was set intraday at 11.7866 on 2009/03/06.
11:06 June 9, 2009 by Nemesis
Please fact check your stories before publishing.

Recently the standard has been dropping quite severely in the Local. Failing that hire me, or another contributer here to write for you.

Even if you have not got a clue how to use Google or another search engine for basic facts, phone an investment house in a bank and they can pull it instantly on there screens.

A suggestion start with something basic.

http://www.xe.com/ will give you basic curency information.

For basic reading about the subject.

Reading Financial Reports For Dummies (For Dummies (Business & Personal Finance)) (Paperback)

by Lita Epstein MBA (Author)

ISBN-10: 0470376287

ISBN-13: 978-0470376287
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