Debt Office to take position for a stronger Swedish krona with the aim to reduce costs

25 May 2018 - Press release

The Swedish National Debt Office will take a position for a stronger krona against the euro, aiming to reduce the cost of central government debt. As a result, the foreign-currency exposure of central government debt will decrease at a slower pace.

– Based on the overall picture of the Swedish economy our assessment is that the krona is weak at present and is expected to strengthen eventually,says Hans Lindblad, Director General at the Debt Office.

The Debt Office will build up the position gradually at various exchange-rate levels. The position can be increased up to SEK 7 billion. When it is time to start closing the position, the Debt Office will release a statement.

According to the Government’s guidelines, the foreign-currency exposure of Sweden’s central government debt is to decrease. To accomplish this, the Debt office buys foreign currency on a day-to-day basis at a pace corresponding to SEK 20 billion per year. At the same time, the Debt Office may take Swedish krona positions of up to SEK 7.5 billion. By taking such position the Debt Office can affect the pace at which the foreign-currency exposure is reduced.

The krona has weakened over the past few years and the depreciation has been accentuated in 2018. The Debt Office expects the krona to strengthen eventually. By lowering the foreign currency purchases during a period of krona weakness, the cost of the debt can be reduced.

During the financial crisis in 2009 the Debt Office built up a position of a total of SEK 50 billion against the euro. That position resulted in a profit of about SEK 8 billion.

Contact
Robert Sennerdal, Press Secretary, +46 (0)8 613 46 94