For a currency supposedly living on borrowed time, Sweden’s krona is looking remarkably chipper.
It has held rock steady against both the Brexit-related influences on the pound rather than any weakness in the krona.and the euro during the past 12 months, and mild volatility against sterling reflects the
It currently trades at $0.11 against the US currency and €0.094 against the . One month ago, on 26 January, it stood at $0.11 and €0.097.
Swedes give themselves an opt-out
And a year ago, on 26 February 2018, it was trading at $0.12 and €0.10.
Against , the krona bought £0.088 on 26 February 2018, £0.084 on 26 January this year and the current rate is £0.081.
Officially, the krona is supposed to be on its way out. Indeed, had all gone to plan, from the European Union point of view, it would have been replaced by the euro ten or more years ago.
However, Sweden has used one of the key conditions of membership – the requirement for an independent central bank – to give itself, in effect, the same sort of opt-out enjoyed by Britain and Denmark. By declining to grant independence to its central bank, the Riksbank, it rules itself out of euro membership.
Krona/krone rate is stable
A referendum was held in 2003, not on membership itself but on central-bank independence, and the notion was defeated.
Brussels remains of the view that Sweden is obliged to join at some point, but in the years since the referendum, its self-imposed exclusion from the eurozone looks less unusual than once it did. Six central and east-European members – Bulgaria, the Czech Republic, Croatia, Hungary, Romania and Poland – are not only outside the single currency but show little sigh of joining in the immediate future.
The financial crisis, and the subsequent need for weaker euro members such as Greece to be bailed out, seems to have made the EU authorities wary of encouraging the less affluent countries into membership of the euro club.
Nor is Sweden unusual in its own region – that honour belongs to Finland, which is the only one of the Nordic countries to use the single currency. Sweden and Denmark have not joined, and Iceland and Norway are not even EU members.
On 22 February, the Riksbank’s executive board commented: “Economic developments have, as expected, entered a calmer phase both in Sweden and abroad. But although growth is slowing down, economic activity is still expected to be good in the coming years.”