(Updates with comments from H&M in CEO in sixth paragraph.)
Sept. 29 (Bloomberg) -- Swedish central bank Deputy Governor Lars Nyberg said the krona will never become a substitute for the Swiss franc as a haven currency.
It will take “much longer” for the krona to become a haven even after investor interest in Sweden’s currency “has grown,” Nyberg said in response to questions today, after delivering a speech in Stockholm. “As soon as it gets a bit messy on the markets, the krona depreciates, and we’re still in that situation.”
The krona, after losing 6 percent against the dollar since the beginning of August, is “fairly reasonably valued,” Nyberg said, following Finance Minister Anders Borg in talking down the krona’s potential to replace the Swiss franc as a refuge from Europe’s debt crisis. The Swedish currency jumped 9.5 percent against the franc the day the Swiss National Bank announced it will peg its currency to the euro.
The instinct to sell the krona “still dominates” when market volatility picks up, Nyberg said. “It will take much longer than people think” before the krona can function as a haven currency. “I don’t think we will ever have a currency like the Swiss franc.”
The krona is the world’s ninth-most traded currency and accounted for 2.2 percent of global turnover in 2010, according to the Bank for International Settlements.
At Stockholm-based clothes retailer H&M, Chief Executive Officer Karl-Johan Persson said he doesn’t plan his business around krona moves.
“That isn’t something we think about, there’s not much we can do about it anyway,” Persson said in an interview in Stockholm today. “The important thing is that we have a good business and that we deliver good numbers in our existing markets.”
The company reported a 17 percent drop in third quarter operating profit to 4.71 billion kronor ($700 million), beating an average estimate of 17 analysts for 4.35 billion kronor.
The krona strengthened 0.2 percent to 9.2079 per euro as of 2:37 p.m. in Stockholm. Versus the dollar, the krona gained 0.8 percent.
Sweden’s central bank this month abandoned a planned interest rate increase after global market turbulence threatened the recovery outlook in Europe and the U.S. Policy makers signaled they may still raise rates once more this year to 2.25 percent.
Borg slashed Sweden’s economic growth forecast last month and estimates the largest Nordic economy will grow 1.3 percent next year, versus a previous forecast for 3.8 percent.
Sweden’s export-reliant economy is prone to “big fluctuations,” meaning it’s “hard to believe” the krona will ever become a haven currency, Borg said in a Sept. 21 interview.
--With assistance from Kim McLaughlin in Stockholm. Editors: Tasneem Brogger, Jonas Bergman.
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