What does the 'exceptionally weak' Swedish krona mean for you?

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The krona dropped still lower last week after Sweden's central bank signalled that with inflation still stubbornly under target there was now no chance of an end to negative interest rates this summer. You now need 10.6 kronor to buy a euro, up from 8.2 back in 2012. 

 

"It's quite clear that the krona is exceptionally weak," Andreas Wallström, Chief Analyst at Nordea Markets, tells The Local. "Apart from the financial crisis, you have to go back 100 years to find it weaker...although of course the euro didn't exist back then, so it's sort of a synthetic euro."

 

He doesn't expect change any time soon. 

 

"There's currently nothing really pointing to a strengthening of the krona. If you look at growth relative to the eurozone, we are really in for a slowdown now, whereas growth in Europe is quite strong." 

Richard Falkenhäll, Senior FX Strategist at SEB, agrees:  "We have probably, along with Switzerland, the lowest short-term interest rates in the world right now, at -0.5, and that's despite several years of very strong growth."

 

"That's a very negative thing for the Swedish krona, so I think we have to get used to a weaker Stocky [krona] at least this year and probably into next year."  

 

If you're a tourist, of course, this is wonderful news: a pint of beer that would have cost you a jaw-dropping nine euros five years back now costs under seven.  

 

But if you're an international who's come to Sweden to work, or is planning to, it's rather less appealing. 

 

"You should make sure that you don't get paid in Swedish krona," Wallström says, slightly tongue-in-cheek. 

 

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Jamie Hart, Managing Director at the recruitment firm Michael Page in Stockholm, says the low exchange rate is less of a problem for a foreigner negotiating their salary ahead of a move to Sweden, as their pay will normally be set by the real cost of living. 

 

"It will just cost the companies more to match up to the euro equivalent," he says. "Generally speaking if you're recruiting people, the exchange rate is not what you base pay on, it's based on the cost of living." 

 

People moving to Sweden may also find buying a house is a less daunting prospect that it was. 

 

 

The exchange rate is more of an issue for workers who negotiated a pay deal back in 2012, when the krona was much higher.

 

If you negotiated an annual salary of 800,000 kronor back then, you've now taken a pretty substantial €21,000 cut in your annual euro earnings. 

 

"For an expat today having an income in krona, you probably just have to get used to earning less," Falkenhäll says. "It's the same for us Swedes. It's starting to get quite expensive to travel abroad." 

But Wallström believes it's not all bad news, as the low exchange rate combined with strong global demand is leading to boom times for Swedish exporters. 

 

"Swedish exporters are enjoying happy days and there is a  labour shortage in many sectors, so the demand for foreigners is likely to increase," he says. 

 

Those already working in export-driven industries are in a powerful position to negotiate a pay increase, while those applying for jobs can probably afford to be quite demanding when it comes to salary. 

 

"There's a big demand for international skillsets particularly in the technology field, digital and engineering," Hart says. "There's a big demand for people who want to move." 

 

For many of people he recruits from the UK and Europe, salary is not the only reason to move to Sweden anyway. 

 

"There's upside in terms of quality of life, the length of your commute, the number of hours you work," he says. "There's still positives about working in Sweden." 

 

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