Swedish krona 'world's strongest' currency
15 Mar 2013, 12:01
Published: 15 Mar 2013 12:01 GMT+01:00
Citing figures from Bloomberg, the Economist wrote earlier this week that Sweden's krona as "been the best performing currency over the last year".
Part of the krona's continued strength, the Economist reported, stemmed from the Riksbank's changing its tone about its willingness to ease monetary policy.
According to Carl Hammer, a chief currency strategist at the SEB bank, Sweden has one of the world's "most well-run economies" and is stable when it comes to the fundamental issues of state debt and budget and trade balances.
All that helps stimulate financial flows into Sweden, according to Hammer, who explained that many other countries have serious deficits and, through monetary policymaking, push intensively to print new money.
"That is negative for those countries' respective currencies and at the same time it benefits the Swedish currency," he told SvD.
The Swedish krona has strengthened the most against the Japanese yen, which has been the worst performing currency over the past year.
In February, the British pound was at its weakest in two decades against the Swedish krona, worth just 9.72 kronor ($1.55).
According to the the Riksbank's KIX currency index, the krona is currently even stronger than it was just before the Riksbank was forced to abandon the fixed exchange rate against the ECU, the predecessor to the euro, in November 1992.
This followed a period of turbulence in the foreign exchange market and speculation against the krona.
Since then, Sweden has had a floating exchange rate, which means that the value of the krona vis-à-vis other currencies is allowed to fluctuate and is determined in the foreign exchange market.
But according to another comparative Riksbank index, TCW, the krona still has some way to go before reaching the pre-November 1992 level.
However, according to Hammer, KIX is regarded as the most important comparative index and it is the one that the Riksbank uses in its analyses.