– Current value of the SEK close to 1913-2013 average.
– Competitiveness and purchasing power at normal levels in a historical perspective. Thus, no major need for the SEK to correct.
– But history suggests that the SEK is undervalued vs the EUR by 25%.
SEK not that strong in a historical perspective
The recent appreciation of the SEK has revived the debate about how strong the SEK can get without harming the Swedish economy. But the current value of the SEK is not alarming in a historical perspective. The chart below illustrates the nominal performance of the SEK since 1913. We also show a measure of the real SEK rate, taking into account different price trends in Sweden and abroad. Note that the real – and not the nominal – rate is most critical to the economy since households and businesses focus not only on the nominal exchange rate, but also on price levels in the individual countries.
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Nordea