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. 

RELATED TERMS
  1. SEK (Swedish Krona)

    In the foreign currency exchange marketplace, SEK is the abbreviation ...
  2. Stocky

    Stocky is a slang term used by forex traders for the Swedish ...
  3. Exchange Control

    Exchange controls are governmental restrictions imposed on the ...
  4. USD

    The USD is the abbreviation for the U.S. dollar.
  5. U.S. Dollar Index - USDX

    The U.S. dollar index is a measure of the U.S. dollar's value ...
  6. Key Currency

    A key currency used is money issued by stable, developed country ...
Related Articles
  1. Insights

    3 Countries With Negative Bond Yields and Interest Rates

    Negative interest rates and bond yields are a relatively new phenomenon, as lenders are charged for capital on deposit while debtors are paid to borrow.
  2. Trading

    Best Places To Go On A Strong Dollar In 2015

    The U.S. dollar is stronger than ever, which means that traveling abroad to certain countries will be easier on the wallet.
  3. Tech

    Sweden On Track to Be the First Cashless Society

    The Scandinavian country is hoping that digital currency will replace its fiat system.
  4. Investing

    Ericcson Q3 Warning Causes Stock Dive (ERIC, CSCO)

    The Swedish Telecommunications giant released preliminary Q3 earnings marking the largest quarterly decline in 13 consecutive years.
  5. Tech

    Why Tech Startups are Taking Sweden by Storm

    Investors searching for the ideal place to funnel their venture capital might be surprised to find that Sweden is home to a strong tech startup community.
  6. Tech

    The Worst Performing Currencies Of 2015

    The U.S. dollar has strengthened over the past year while weakness in Europe and the former Soviet Union has led to declines in those currencies.
  7. Investing

    How Negative Interest Rates Can Affect Currencies

    Analyze the relationship between interest rates and currency devaluation. Examine the impact of negative rates and how further declines could affect currencies.
  8. Investing

    Q1 2016 Review: Equities, Commodities and More

    It was a wild ride in the first quarter of 2016 – a tale of two halves.
  9. Taxes

    Is Free Education Really Free?

    As the cost of college in the U.S. continues to climb, it's hard to believe that in some countries you can still be educated for free.
  10. Insights

    American Economist Richard Thaler Wins Nobel Memorial Prize

    The University of Chicago's Richard Thaler has been recognized for his contributions to behavioral economics.
RELATED FAQS
  1. How can you calculate correlation using Excel?

    Find out how to calculate the Pearson correlation coefficient between two data arrays in Microsoft Excel through the CORREL ... Read Answer >>
  2. Repo agreements versus vs. reverse repo agreements

    Learn about repurchase agreements and reverse repurchase agreements, their risks and tax implications, and where the Federal ... Read Answer >>
  3. How does inflation affect the exchange rate between two nations?

    Countries attempt to balance interest rates and inflation, but the interrelationship between the two is complex and can influence ... Read Answer >>
  4. What is the difference between a copay and a deductible?

    Learn how the correlation coefficient may be used to predict the relationship between the returns of two stocks, but also ... Read Answer >>
Trading Center