The SNDO unwinds the Swedish krona position slowly

7 September 2010 - Press release


The Swedish National Debt Office's position for a stronger krona, equivalent of SEK 50 billion, will successively be closed. The unwinding of the position will take up to a year.

We believe that the Swedish krona could appreciate further from these levels, though we consider the current levels to be relatively normal. We are not targeting a best possible exchange rate. The position will be closed on many different levels.  

The Debt Office aims to start the unwinding of the position in the nearby future, depending on the prevailing market conditions.

The unwinding of the position will not follow a predetermined pattern or at specific levels. Market conditions such as liquidity, flows and volatility will affect the pace at which we proceed. We aim to act cautiously. The effect will be that the volumes will some weeks or certain months be small in comparison to the total market turnover.  

We will not comment on the unwinding process regularly. We will of course report the result once the position is closed.


The Debt Office increased its exposure in foreign currency gradually at the beginning of 2009. The weak Swedish krona exchange rate at the time of the financial crisis gave the Debt Office the opportunity to issue bonds in foreign currencies at attractive terms, provided that the krona is stronger at maturity.  

In May 2009 the government allowed the Debt Office to increase the exposure from SEK 15 billion to 50 billion. The position was achieved at the end of 2009.

The increased funding need during the financial crisis of 2009 allowed the Debt Office to increase the currency exposure by issuing loans. By swapping Swedish krona funding into foreign currency we could increase our debt in foreign currency. We swapped the loans by using FX forwards, where we bought Swedish krona vs. Euro.

The exposure through the FX forwards has the effect that the cost of the government debt decreases if the krona appreciates. We bought Swedish krona vs. Euro through forwards at levels when the EURSEK exchange rate varied between 10 and 11.50. The unrealised profit of the position was by the the end of August roughly SEK 6 billion.  

For more information, please contact:
Bo Lundgren, Director General, +46 (0)8-613 46 51
Thomas Olofsson, Director, +46 (0)8-613 47 82