Krona’s surge is definitely hurting exporters big time in the largest Nordic economy, as mentioned by the Prime Minister of Sweden, Fredrik Reinfeldt. Hence, Sweden needs to create policies which will keep the interest rates low. Reinfeldt added that public finances should be kept in order as that’s generally the foundation when it comes to keeping the interest rate levels low. Reinfeldt confirmed that his colleagues are currently working on to strengthen competitiveness of Sweden and they intend to increase incentives to work.
Since the end of 2008, Krona has gone ahead by 27% against Euro and this sparked call from the exporters to stem the gains. Earlier in 2013, many policy makers of Sweden, including Reinfeldt, gave signals that they are concerned with this surge. Currently, they are stepping up rhetoric for cooling down Krona, just like other Governments from countries such as New Zealand and Switzerland are working on declining their respective currencies.
In the last 12 months, Krona has surged by 8.5% and this is the 2nd best performance among the developed market currencies, just after Kiwi, the major currency of New Zealand. Krone, the major currency of Norway has jumped up by 3.5% in these 12 months. Just like Krona, Krone has benefitted heavily due to the haven appeal as well.
The Finance Minister of Sweden, Anders Borg, on last week, stated that Sweden should act fast if Krona goes to a higher level as otherwise things will get very tough for the exporters. Incidentally, the strength of currency is triggering a shift in strategy from the central banks of the Nordic region. Apart from that, it is harming the export based model of growth of all the Nordic countries.
On the other hand, the Prime Minister of Norway, Jens Stoltenberg, did not make any comment on the strength of Krone. However, he mentioned that Norway is performing better if the rest of the Europe is considered, mainly because the oil revenue was managed in a more responsible way by the policy makers of the country. Incidentally, Norway is the biggest oil exporter of the Western Europe.
The economic forecasts for the next year have been cut by Sweden as they cited the impact of Krona on the labor market and exports. Riksbank decided to delay the monetary tightening plans on 17th April, until 2014’s 2nd half.