In times of complex economic and political environments, as the one lived in the Eurozone in the last years, investors has been pushed, in their search for returns with reasonable risks, to invest in economies with solid public finances, with an stable political system and with positive macroeconomic dynamics. Between the group of developed countries there are limited opportunities and one that fulfills these requirements is Sweden, a country with a population of 9,3 million habitants, placed in the seventh position within Human Development Index and in the second position in the World Competitivity Index. Its trade balance is positive (historically net exporter) and they have leading companies in sectors as materials (Lundin Petroleum, Boliden, Svenska Cellulosa AB), high precision equipment machinery (ABB, Sandvik) and motor vehicles (Volvo, Scania).
At the end of 2011 its public finances reflected an enviable situation compared with other developed economies: fiscal superavit of +0,3% and total public debt of 38,4% (both in percentage of nominal GDP), when the Eurozone mean was -4,1% and 87,2% (respectively) and the US numbers was -8,2% and 80,28% (respectively).
The decision of staying outside the European Monetary Union has allowed Sweden to keep its monetary independence. Swedish Central Bank lowered interest rates from 2,00% to 1,50% because of economic deceleration and its balance sheet was reduced in 2010 to historical “normal” levels after its expansion during first months of the post- Lehman era.
Keeping aside from the Euro-area group has also kept away from political turmoil derived from euro periphery debt crisis. Its financial sector was restructured in early 90´s that moved further away from the world financial mainstream that collapsed in 2007-2008.
Summing up: healthy public sector, diversified and export-biased economy, fiscal and monetary Independence and a reasonable option for global investors to diversify their portfolios, all of them factors that has pushed its currency to appreciate against the euro almost a 42% in the last three years and could be higher. Swedish Krone (SEK), in a technical point of view, moved into a reduced range since 2002 to 2008 between 9,00-9,50 SEK/EUR that was broken on the upside when world trade collapsed after Lehman´s fall, making the SEK to depreciate till reaching 12,00 SEK/EUR. When world trade stabilized and euro periphery debt crisis exploded, SEK began a slow way to appreciation against EUR, that approaches the currency to the same levels than in 2000, near the 8,00 level. On breaking down the 8,70 support level past 4th of July, there is still and intermediate resistance before reaching 8,00 placed in 8,20-8,30.
Which are the factors that could potencially revert this downtrend? A quick and definitive solution for the euro región (a low probability outcome) or a new global recesión that could reduce the global trade flow that wold be bad news for export-biased economies.
At the end of 2011 its public finances reflected an enviable situation compared with other developed economies: fiscal superavit of +0,3% and total public debt of 38,4% (both in percentage of nominal GDP), when the Eurozone mean was -4,1% and 87,2% (respectively) and the US numbers was -8,2% and 80,28% (respectively).
The decision of staying outside the European Monetary Union has allowed Sweden to keep its monetary independence. Swedish Central Bank lowered interest rates from 2,00% to 1,50% because of economic deceleration and its balance sheet was reduced in 2010 to historical “normal” levels after its expansion during first months of the post- Lehman era.
Keeping aside from the Euro-area group has also kept away from political turmoil derived from euro periphery debt crisis. Its financial sector was restructured in early 90´s that moved further away from the world financial mainstream that collapsed in 2007-2008.
Summing up: healthy public sector, diversified and export-biased economy, fiscal and monetary Independence and a reasonable option for global investors to diversify their portfolios, all of them factors that has pushed its currency to appreciate against the euro almost a 42% in the last three years and could be higher. Swedish Krone (SEK), in a technical point of view, moved into a reduced range since 2002 to 2008 between 9,00-9,50 SEK/EUR that was broken on the upside when world trade collapsed after Lehman´s fall, making the SEK to depreciate till reaching 12,00 SEK/EUR. When world trade stabilized and euro periphery debt crisis exploded, SEK began a slow way to appreciation against EUR, that approaches the currency to the same levels than in 2000, near the 8,00 level. On breaking down the 8,70 support level past 4th of July, there is still and intermediate resistance before reaching 8,00 placed in 8,20-8,30.
Which are the factors that could potencially revert this downtrend? A quick and definitive solution for the euro región (a low probability outcome) or a new global recesión that could reduce the global trade flow that wold be bad news for export-biased economies.
