The dollar is approaching 9 kronor - the lowest level against the krona in just over four years. This is despite long-term US market interest rates turning downward and Wall Street - along with other stock exchanges - rising after Trump's opening for a negotiated solution on the future of Greenland on Wednesday.
“Great risk appetite”
Increased risk-taking in the market explains a large part of this, according to Tommy von Brömsen, currency strategist at Handelsbanken.
When stock markets rise and there is a great appetite for risk in the markets, you usually see the Swedish krona, the Norwegian krone, the Australian dollar - those types of currencies - going strong, he says.
In the second category are currency bulls, such as the dollar or the Swiss franc, according to von Brömsen.
But Thursday's downward pressure on the dollar follows the fact that the dollar was also heavily pressured downward earlier in the week - albeit in a new wave of "Sell the USA" behavior in the market as a result of the Greenland crisis.
Trust in the US is taking a long-term hit from Trump's policies, and that keeps the market theme "Sell USA" alive.
"Confidence in American politics and institutions is gradually being eroded as new things like this come up all the time. It continues to gnaw, and we have seen over the past year that investors want to reduce their dollar exposure and instead spread the risks," says von Brömsen.
The dollar is expected to continue its downward trend
The krona has risen by just over 20 percent against the dollar, to 9.07 per dollar, since Trump was inaugurated as president a year ago. The dollar is now expected to continue down to 8.70 kronor by the end of 2026 and in the long term may stabilize around the rate of 8.50 kronor, according to von Brömsen:
There are expectations of a strong recovery in Sweden, and we have good government finances. There are many things that point to the krona's advantage. Then we have a weakening dollar in the wake of the market losing confidence in American politics. It could be messy and perhaps focus on unsustainable government finances in the US.
