From economists to small business owners, Swedes are worried that their central bank’s policies are undermining their currency. The krona has plunged more than 10% against the euro since the middle of last year, making imports considerably more expensive in an economy in which small businesses tend to rely more on buying goods from abroad than exporting.
The currency’s slide follows the central bank’s decision to delay any exit from negative interest rates as policy makers argue they need more signs inflation will stick to a 2% target, Bloomberg reported.
But as the policy leaves Swedes poorer, more people are speaking out. The central bank is “creating new risks,” said Anders Eklof, chief currency strategist at Swedbank AB in Stockholm. “Current policy generates inflation that withdraws purchasing power and generates soaring import prices during a short period, at the same time as the economy folds.”
According to the Swedish Federation of Business Owners, about a quarter of the country’s smaller companies are importers, while only 10% export. For Morsjo Deli, which makes crisp bread snacks, its UK marketing bill has jumped and other bills are ballooning beyond budget as the krona sinks.
“It feels like a threat, it doesn’t feel positive,” said Anna Godevarn, the company’s CEO and founder. “I wish something could be done to stabilize it a bit against the euro, pound and Norwegian krone.”
The weak currency has also made Swedish companies a cheaper target. The number of merger and acquisition deals in the country is up by more than 200% this year, with companies such as Victoria Park AB and Wilson Therapeutics AB being snapped up from abroad. By contrast, M&A is down 38% overall this year in Western Europe.
