What is the SEK (Swedish Krona)
In the foreign currency exchange marketplace, SEK is the abbreviation for the Swedish krona which is the national currency of Sweden. It is among the top currencies currently trading in the world and accounts for about 2 percent of the Forex (FX) market.
The krona, which means crown, has been Sweden's currency since 1873 and is also expressed by the symbol KR. It replaced the Swedish riksdaler. One krona comprises 100 öre. Sweden abandoned the öre coin, so prices are typically rounded up to the nearest krona. One of its nickname in Sweden is the spänn.
BREAKING DOWN SEK (Swedish Krona)
The exchange rate of SEK depends heavily on the monetary policy of Sweden. The country's central bank is known as the Sveriges Riksbank, the world's third oldest bank, and oldest central bank. In 1992, Sweden implemented a floating exchange rate for SEK, and it has been allowed to float against other currencies since then, with the Sveriges Riksbank occasionally intervening to stabilize the krona.
SEK was chosen as the code for the Swedish Krona in 1978 by the International Organization for Standardization, as part of its ISO 4217 list of currency designator codes. SEK has a strong currency correlation with the currencies of other Nordic countries, such as the Danish krone (DKK) and the Norwegian krone (NOK). While most countries in the European Union have adopted the Euro, Sweden, like Denmark and Norway, is one of a handful of EU member nations that have opted to maintain their legacy currencies.
Even though the Treaty of Maastricht holds Sweden responsible for eventual conversion to the Euro, a referendum in 2003 found 56 percent of voters opposed the new currency, and the country has since held off joining the Euro by avoiding specific necessary monetary requirements that would require it. The government has said it will not bring a new referendum on the issue until it has sufficient popular support, but the appetite for the Euro has only decreased. Although there is still occasional debate on the subject, it appears there are no plans for conversion anytime soon. EUR/SEK is Scandinavia's most significant exchange rate.
Safety of SEK
Despite Sweden's relatively small economy, its well-educated and tech-savvy workforce and the fact that it is home to many multinational corporations have led many Forex observers to classify SEK as a safe haven currency. A safe haven is expected to retain or increase in value during times of market turbulence
Still, global uncertainties, especially during threats of an international trade war, have led to some losses for the safe haven krona in recent months. According to BER, an online platform for comparing exchange rates, as of April 2018, SEK was the lowest performing G10 currency of the year so far, with losses of about 5-percent, 3-percent, and 8-percent compared with the euro, dollar, and yen, respectively. It also cited the Riksbank's worries about inflation, at 1.6 percent, below the central bank's 2 percent target, and argues that SEK could fare poorly going forward, given its global sensitivities, should trade and tariff tensions between the U.S. and China continue to rise.