Robert Bergqvist, SEB’s senior economist, has made a bold statement challenging the market’s perception of the Swedish krona. In a post on X, he argues that the dollar is “grossly overvalued and SEK grossly undervalued.” Accompanied by a Black Friday ad offering a 27% discount on the krona, Bergqvist warns that this discount may persist.
This assertion is supported by SEB’s latest market report, which highlights the krona’s decline since the final stretch before the US election. Currently trading at 11.03 against the dollar, the US currency is 93 ore more expensive than on September 27, representing a depreciation of nearly 9.2%.
While the krona has strengthened slightly against the euro post-election, it has weakened against the dollar. SEB’s latest report, Sweden 360, attributes this negative premium on SEK to expectations of Donald Trump imposing tariffs on European companies. Additionally, the krona has historically reacted stronger than other currencies when investors exhibit lower risk appetite, a trend exacerbated by the escalation in the Ukraine conflict.
Historically, the krona tends to depreciate in a global environment where the dollar remains strong – a scenario that occurred both pre and post-election as global currencies lost ground against the US dollar.
SEB anticipates an interesting December, citing seasonal trends that typically favor a stronger Swedish krona and a weaker dollar during the holiday season. However, indicators suggest that the relationships between the euro, dollar, and US interest rates – which heavily influence the Swedish currency – are currently at extremes, making them susceptible to triggering corrections.
A downward trajectory in Swedish interest rates would widen the interest rate differential with other currencies, potentially further weakening the krona. While there is speculation about further rate cuts, SEB’s economist remains steadfast in his forecast:
“Riksbank’s headache grows but does not alter the interest rate forecast,” writes Robert Bergqvist.
This contrarian view challenges conventional market wisdom, suggesting a potential shift in the currency landscape that investors should closely monitor. As global economic dynamics continue to evolve, the Swedish krona’s fate remains uncertain, with a delicate balance between various factors influencing its valuation in the near term.