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Currency: The strong Swedish Krona and weaker Euro puts Swedes in best and cheap Euro holiday places but...

Thursday, 05 July 2012
European vacating Swedes can thank Stefan Ingves for a record-cheap Euro as oppose to the Swedish krona. The exchange rate has not been low in 11 years but it remains to see how this affects Swedish tourist industry.

Riksbank's decision to leave the repo rate unchanged at 1.5 percent reinforced the value of the Swedish Krona on Wednesday. At the same time, the crisis in Greece and Spain means that the Euro had to weaken in its value since mid-May.
"The trend today hangs together with the Riksbank's statement. The interest rate gap with Europe is unchanged and it strengthens the Krona, "said Claes Måhlen, chief strategist for fixed income and currency analysis at Handelsbanken.

The result is that one €1= about Skr 8.67, presenting the Swedes with the lowest rate of the euro since December 2000.

"You can now see that the Swedish Krona will begin trading a little differently. It may not be as much damage when stock markets collapse. It is too early to say that the krona is a safe haven currency as the Swiss franc. But the ball is rolling in that direction, "says Claes Måhlen.
As the Swedes are dancing out of the country to enjoy cheap touristic areas in the euro zone areas, it remains to see how the strong Swedish krona will in tern attract tourist into the country. The flip side of this policy is that a strong krona could repel tourists and this weaken the challenging Swedish tourist sector.
By Team

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