The TV sequence Sport of Thrones struck a chord in Sweden — and never simply because Jon Snow’s iconic fur cloak was comprised of Ikea rugs. The a lot feared winter chill of that drama lingers in Sweden. The krona is the worst performing of the G10 most closely traded currencies up to now this yr. A small, open financial system, Sweden is uncovered to Trumpian commerce wars. However its foreign money’s current weak point relates extra to home woes.
Escalating US-China tariff strife would harm Swedish producers reminiscent of Volvo Automobiles, Scania and auto trade suppliers. But Swedish manufacturing sentiment this month remained above the historic common, the NIER analysis institute mentioned on Tuesday. A weaker krona ought to enhance the virtually 30 per cent of GDP associated to the exports of products and companies, together with Ikea shops outdoors Sweden.
Domestically, issues are drab. Sweden’s first-quarter GDP information on Wednesday will in all probability present it lagging behind European rivals, dragged decrease by weak home demand. Sweden’s housing market peaked final yr. Costs fell 5 per cent, extra in Stockholm. The Riksbank warns that prime family indebtedness, largely the results of ultra-low rates of interest, is the most important threat to the financial system. Customers have tightened belts. Banking scandals do nothing for the temper. Swedbank is caught in a Nordic-wide controversy over suspect funds flowing by means of Baltic branches.
As soon as upon a time the krona had an virtually defensive high quality for foreign money merchants. However not like the Swiss franc, which is lifted by the Alpine state’s standing as a haven at occasions of world stress, krona buying and selling is much less liquid. That reduces its former attraction.
A extra necessary purpose for its weak point is Riksbank nervousness about inflation undershooting. Expectations about rate of interest rises had been pushed out after final month’s central financial institution assembly. The Swedish foreign money has recouped a few of its losses in current days. That rebound shouldn’t final any longer than would rugs passing as fur.
If you’re a subscriber and wish to obtain alerts when Lex articles are printed, simply click on the button “Add to myFT”, which seems on the high of this web page above the headline.