Strong Swedish Currency in 2012

We see a strong Swedish currency in 2012 just as the Swedish economy. The Swedish Krona will surely remain strong as long as the crisis persists in Europe. For the Swedish export companies, this is not such good news but it says a lot about the financial situation in Sweden today.

The Swedish Krona has strengthened almost 10 percent against the Euro in about 5 months with the beginning in May 2012. The shaky international markets have prompted investors to flee to safe currencies and the Swedish Krona is now considered internationally to be a safe currency to invest in.

The currency rate is further run up by international investors that hamster the currency and the level of the Swedish Krona may now be regarded more or less as overvalued. As long as the crisis in Europe is in progress, it will surely continue to attract investors that choose a stable currency, which will keep the rate at a high level.

The fact that Sweden has a high AAA credit rating is clearly evident. Sweden has a strong financial position and has not been directly affected by recent years’ international financial problems. Of course international crisis has a global affect and countries not directly affected may in time see an indirect effect as in cases where important export markets lose purchasing power. But Sweden has not so far been affected by the crisis and in recent months the proportion of foreign holders of Swedish government bonds increased significantly.

The Norwegian Krone and Norway is in the same situation as Sweden and the Swedish Krona. Swedish and Norwegian government securities are valued as AAA assets and are very attractive investments when the international markets are unstable.

For the Swedish export companies the strong Swedish Krona can however cause a downside, the effect of the exchange rate have markedly shrunken their revenues. Many Swedish companies that have a large portion of income that originates from exports probably expected to submit reports of reduced revenues and profits for 2012. This can also be seen as an indirect effect triggered by the crisis in Europe.