Weak krone makes trade in Sweden much more expensive – news Norway – Overview of news from different parts of the country

The exchange rate for Swedish kroner rises sharply against Norwegian kroner on Wednesday morning. The reason is that price growth in Sweden came in much stronger than both the experts and the Swedish Riksbank had expected. This may mean that the interest rate will have to rise more than expected to cool down the economy. On Wednesday morning, one Swedish krone costs 1.01 Norwegian krone. In addition, Swedish food prices are rising sharply. – The inflation in Sweden was a big surprise. That’s what pulls up the Swedish krona, says currency strategist Magne Østnor at DNB Markets. Magne Østnor is a currency strategist at DNB Markets. Photo: Johan B. Sættem Food prices rise much more among Swedes In the last year, the prices of groceries in Sweden have risen by 21 per cent, according to Swedes’ responses to Statistics Norway. In comparison, Norwegian food prices have increased by just under 9 per cent in the past year. Thus, both a weak Norwegian krone and much more expensive food in Sweden contribute to making it less favorable for Norwegians to shop in Sweden. Apart from a brief blip during December 2021, we have to go back to September of the same year to see an equally weak krone. Growth in consumer prices in Sweden is now almost twice as strong as in Norway. Over the past year, consumer prices in our neighbor to the east have increased by 12 per cent, while the corresponding figure for Norway was 6.3 per cent in February. Another double interest rate jump is expected in Sweden – The so-called core inflation came in at 9.3 per cent on an annual basis, while the Riksbank expected 8.0 per cent. The market is now pricing in another double interest rate jump from the Swedish Riksbank at the next rate meeting, says Østnor. The Riksbanken is Sweden’s central bank, equivalent to our own Norges Bank. The Riksbank also manages its interest rate based on how much prices increase. When prices rise more than expected, it contributes to an expectation of even higher interest rates. This in turn causes the Swedish krona to strengthen. At the time of writing, the Norwegian krone has weakened by approx. 7 percent against the Swedish krona since New Year. There is still broad-based price pressure in Sweden. Both service prices and commodity prices are increasing faster than expected, writes Handelsbanken markets in its morning report.



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