Warning: The krona can collapse to a record low level

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The Swedish Head of Nordea Markets, Kristin Magnusson Bernard, does not exclude that the krona falls to the levels of the financial crisis.

  • Now there is no one who has a positive view of the crown no matter where they come from, she notes in an interview with Svenska Dagbladet, SvD.

She has compared how the euro trade has seen with 140 different currencies.

And one of the worst currencies was the Swedish krona.

The krona’s development and faltering stability have only gone better than some of the world’s most unstable economies, according to Sweden’s head of Nordea Markets Kristina Magnusson Bernard in an interview with SvD.

She has recently investigated how the krona had evolved this year, and concluded that only Haiti, Jamaica and Gambia’s currencies had deteriorated by the over 140 currencies traded against the euro, according to SvD.

She thinks it is remarkable that the krona was not strengthened more given how strong Thursday’s GDP figure was actually according to an interview with SvD.

In order to strengthen the value of the krona against other currencies, and in particular the euro, an increased interest rate is needed. But there is a need for substantial intervention, says Kristin Magnusson Bernard. She wants to see an increase of a bit over 100 points, that is, one percentage point, in many small bumps.

  • A raise here or there will not turn this negative crown trend. We are talking about a good bit over 100 point increases at a fast pace to really turn it over. And nobody believes this is possible at present, she says to the newspaper.

Risks with falling krona – and declining economy
And if the krona will fall further in value, that is, an increase in inflation will end up in a tight spot, says Kristina Bernard Magnusson, because one needs to increase the interest rate in an attempt to bring inflation down to the target.

At the same time, the Swedish economy is moving towards worse times, times when it is preferable to have a low interest rate to stimulate companies and private individuals’ investment and consumption.

  • The Riksbank does not want to end up in a situation where Sweden gets an inflation shock while the real economy is folding properly – because then you end up in a very difficult situation, warns Kristin Bernard Magnusson in SvD.