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Future Projected Outlook of Swedish Krona

In the year 2008 and 2009, the world economy has suffered much due to recession. Almost all the export oriented countries had to undergo the impact of this recession. Many giant companies, banks, insurances, factories became unstable and even bankrupt. In some countries the whole economy collapsed. Millions of people became unemployed. Sweden was not an exception in this case. They also went through the same condition and this had a great impact on the Swedish Krona. The value of krona depreciated against many other major currency systems.

Following a year long plunge against Euro and dollar, investors, along with official of Sweden’s central bank, were waiting for a rebound of Swedish krona versus the U.S. dollar and the Euro. The Swedish currency plunged last October the central bank diminished the expectations of the investors’ for further rise in the interest rates. It became the worst performing currency in comparison to other major European currencies. Connection to Baltic banks and rapidly increasing unemployment rate was a part of this problem. Swedish krona dropped from 6.45 to 7.06 versus U.S. dollar at this time.

The recent update of news has brought back the expectation of the rise in interest rates sooner than predicted previously. It is a clear signal that Sweden’s economy will expand vastly and the interest rate will increase faster than the U.S. or other European countries. Analysis reports have showed that business and consumer confidence is now soaring with the recent increment in the GDP supporting the prediction.

The reasons behind the confidence of the consumers and business are few but substantial. The budget deficit of Sweden is shrinking day by day while in most other European countries the deficit is increasing. The rate of economic growth has become twice as fast as other European countries and the predictions of the central bank of Sweden. Fredrik Reinfeldt’s strategy to sell off state properties and cutting off taxes is also another reason for this. In addition to that, the bond and stock market of Sweden are outperforming in comparison to other European stock markets.

The Swedish krona has started appreciating more than the US Dollar and the Euro recently. The traders are thinking it safe to invest in krona instead of other currencies as long as Euro is under pressure. UBS, the second largest currency trader, has predicted that the Krona will be traded at 8.6 per Euro at the end of the year down from 8.75 per Euro of the present time.  

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Modified:03/10/2011
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