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Swedish krona 'world's strongest' currency

15 Mar 2013, 12:01

Published: 15 Mar 2013 12:01 GMT+01:00

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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.

Story continues below…

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.

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Your comments about this article

15:09 March 15, 2013 by HelmiVainikka
Maybe you should have mentioned that having a too strong currency is if anything harmful and bad? Just look at the steps taken by Switzerland after their own currency got too strong.

As for Bloomberg, look at this:

15:42 March 15, 2013 by johan rebel
Exactly, having too strong a currency is not a good thing. Ask the Japanese.
20:20 March 15, 2013 by Kronaboy
There is a reason why the YEN is so weak, they (along with China, USA, UK etc…) have been printing like it's going out of fashion in an attempt to reduce the value of their respective currency; it's called a currency war and Sweden is losing.
12:35 March 16, 2013 by Grass
I think there must be THOUSANDS of people over looking or forgetting the Australian Dollar. It is MUCH stronger than anything else in the currency market at the moment.

Just check it's performance against the US$, the Euro and the SEK since the GFC hit. It is Outstripping all other currencies.
12:33 March 18, 2013 by glawson3073
How the weak minded believe what their government tells them, here in Australia we are told our currency is the strongest in the world, but I don't believe it , if our currency is so strong why is the so much unemployment around and me working for less money than I did 5 years ago. Funny how a government can spread propganda and everyone believes it with out a question.
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