Bloomberg News

Sweden’s Borg Will Be ‘Very Happy’ for Krona to Weaken Further

May 29, 2012

Europe’s debt crisis will probably keep up pressure on Sweden’s currency to weaken further, helping support the largest Nordic economy amid slumping demand, Swedish Finance Minister Anders Borg said

Further krona depreciation is “a good stabilizer” and acts “as a buffer” when global demand is slowing, Borg said today in an interview in Pretoria. “I’m very happy when the krona is depreciating and weakening when we have weakness in world demand. If we should see further weakness in the euro area I’m presuming that the krona would weaken further.”

The krona has slumped against the dollar and the euro as investors dumped less liquid currencies amid deepening concern over Spanish banks and growing speculation Greece will leave the euro area. The currency plunged 6.1 percent against the dollar this month, the worst performance since September, and traded at 7.1496 at 11:05 a.m. in Stockholm. It has lost 0.8 percent against euro this month, trading at 8.9726.

Swedish economic growth will slow to 0.4 percent this year from 3.9 percent in 2011, the government predicted on April 16. Sweden relies on exports for about half its economic output. About 70 percent of its sales abroad go to Europe.

“We’re now in a very uncertain spot,” Borg said. “We will have to see how the Greek election pans out. There are some uncertainties concerning the Spanish banks.”

Still, Borg said the economy may come out of the crisis in good shape because the country is “pro cyclical when it comes to our composition.”

To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net. mcohen21@bloomberg.net; Franz Wild in Johannesburg at fwild@bloomberg.net.

To contact the editor responsible for this story: Jonas Bergman in Oslo at jbergman@bloomberg.net


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