The warning: This is how expensive the euro can become next year

Think you that the foreign holiday is already expensive? Then be prepared for the Swedish krona to become even weaker next summer. A major bank is now warning of a clear decline next year.

» Updated: September 25 2024

» Published: September 20 2024

The warning: This is how expensive the euro can become next year
Photo: Kirsty Wigglesworth/AP/TT

Share this article

The Swedish krona strengthened after Wednesday's interest rate cut in the USA and hope is rekindled for a turnaround. However, previous hopes for the krona have so far come to shame.

After the significant weakening in recent years, it has remained largely unchanged since the turn of the year against the euro and dollar. Swedes who want to travel abroad now have to pay around 10.16 kronor for a dollar and 11.34 kronor for a euro.

Those who hope for a clear strengthening of the krona in the coming year are, however, mistaken, according to Norwegian major bank DNB.

In a 12-month perspective, DNB believes that one euro will cost 11.80 kronor, i.e., about 4 percent more than currently. They also estimate that the dollar will become more expensive and cost 10.80.

In three months, the assessment is 11.60 against the euro, so our picture is that the krona will weaken, says chief economist Ulf Andersson.

A weakening

The background to the weak krona exchange rate is, among other things, a continuous savings surplus in Sweden, which is used for investments in securities in euros and dollars.

This contributes to a weakening of the krona. This plays a major role. The financial flows are entirely decisive for where the krona goes in the short term, not the commercial ones, says Ulf Andersson.

Besides this factor, the fact is that the Swedish krona, just like the Norwegian krona, is a sensitive currency, and in times of market turmoil, one chooses to sell kronor.

Furthermore, there is very low liquidity, which means that it can suddenly drop 20 öre without much happening in the Swedish economy, it's nothing unusual at all.

No factors

Ulf Andersson does not see any factor that can really change the situation in the short term.

I don't see what would make the krona much stronger given the factors that have taken it to where we are today. What has changed?

Nordea, on the other hand, believes in a strengthening of the krona, where one euro will cost 10.70 in December next year.

Normally, this environment we are now entering with lower interest rates is better for our krona than when you have higher interest rates, says chief economist Annika Winsth.

Corrected: In an earlier version, there was an incorrect formulation regarding Nordea's assessment of the krona.

Tags

Author

TTT
By TTEnglish edition by Sweden Herald, adapted for local and international readers

More news

EU Fines Google 33.9 Billion Kronor for Ad Service Favoritism
1 MIN READ

EU Fines Google 33.9 Billion Kronor for Ad Service Favoritism

US Job Market Slows with Only 22,000 New Jobs in August
2 MIN READ

US Job Market Slows with Only 22,000 New Jobs in August

Tesla Board Proposes New Bonus Plan for Elon Musk
1 MIN READ

Tesla Board Proposes New Bonus Plan for Elon Musk

13 Suspected of Insider Trading After Dawn Raid
1 MIN READ

13 Suspected of Insider Trading After Dawn Raid

18 Charged in Major Insider Trading Case in Sweden and Norway
1 MIN READ

18 Charged in Major Insider Trading Case in Sweden and Norway

Skandiabanken Offers Lowest Mortgage Rates in August
1 MIN READ

Skandiabanken Offers Lowest Mortgage Rates in August

Stockholm Stock Market Rises for Third Consecutive Day
1 MIN READ

Stockholm Stock Market Rises for Third Consecutive Day

Danish Energy Giant Ørsted Lowers Profit Expectations for This Year
1 MIN READ

Danish Energy Giant Ørsted Lowers Profit Expectations for This Year

Foreign Ownership Boosts Swedish Economy with Productivity Growth
1 MIN READ

Foreign Ownership Boosts Swedish Economy with Productivity Growth

Calm Housing Market Spurs Speculator Interest
2 MIN READ

Calm Housing Market Spurs Speculator Interest

Asian Stock Markets Rise Amid US-Japan Tariff Agreement
1 MIN READ

Asian Stock Markets Rise Amid US-Japan Tariff Agreement

USA and Japan Reach New Trade Agreement on 15% Tariffs
1 MIN READ

USA and Japan Reach New Trade Agreement on 15% Tariffs

Activity Toys Pose Serious Injury Risks for Children in EU Survey
1 MIN READ

Activity Toys Pose Serious Injury Risks for Children in EU Survey

Hexagon Sells Software Business for 30 Billion Kronor
1 MIN READ

Hexagon Sells Software Business for 30 Billion Kronor

US Stock Market Sees Broad Gains Amid Labor Market Weakness
1 MIN READ

US Stock Market Sees Broad Gains Amid Labor Market Weakness

Ørsted Sues Trump Administration Over Halted US Wind Project
1 MIN READ

Ørsted Sues Trump Administration Over Halted US Wind Project

US Private Sector Adds 54,000 Jobs in August, Below Expectations
1 MIN READ

US Private Sector Adds 54,000 Jobs in August, Below Expectations

Goldman Sachs: Fed Uncertainty Could Propel Gold Prices
1 MIN READ

Goldman Sachs: Fed Uncertainty Could Propel Gold Prices

Food Chains in Sweden Promise Price Cuts with VAT Reduction
3 MIN READ

Food Chains in Sweden Promise Price Cuts with VAT Reduction

Experts Criticize Halving Food VAT as Ineffective and Costly
2 MIN READ

Experts Criticize Halving Food VAT as Ineffective and Costly