DEFINITION of SEK (Swedish Krona)
The SEK is the currency abbreviation for the Swedish krona, the currency for Sweden. The Swedish krona is made up of 100 öre and is often presented with the symbol kr. The krona, which means "crown" in English, is also known in Sweden as the "spänn" or "kosing."
BREAKING DOWN SEK (Swedish Krona)
The Swedish krona replaced the riksdaler riksmynt at par in 1873 when the Scandinavian Monetary Union was formed. This union of Sweden and Denmark used the gold standard to value the krona at 1/2,480 of a kilogram of gold, and two years later Norway joined the union pegging it currency at the same value as its Scandinavian counterparts. After WWI and the break-up of the union, the currencies were separated, and Sweden kept its own respective krona.
Since 1992, the exchange rate has been allowed to float against other currencies, with the central bank intervening when necessary to stabilize the krona's value.
SEK and Negative Rates
In July 2009, Sweden became the first country to experiment with negative rate (NIRP) when the Riksbank lowered the repo rate to 0.25 percent, which caused the deposit rate to fall to minus 0.25 percent. Initially the SEK strengthened as pundits saw it as a positive that Sweden was taking a strong initiative to right its economy amidst the Great Recession.
However, over the coming years the Swedish economy foundered and in 2014, the Riksbank slashed the repo rate to zero, which saw the deposit rate fall a further 50 basis points to minus 0.75 percent. This resulted in a prolonged period of weakness in the krona, and in the 12-months following the shift, the krona fell by more than 25 percent against the U.S. dollar.
Correlations of the SEK
The SEK is strongly correlated with its Scandinavian counterparts the Danish krona and the Norwegian krona.