Anna Seim: Driving forces behind the development of the krona
Speech by Ms Anna Seim, Deputy Governor of the Sveriges Riksbank, in a seminar on the development of the krona, organised by the Sveriges Riksbank, Stockholm, 14 November 2025.
The views expressed in this speech are those of the speaker and not the view of the BIS.
The Swedish krona has just turned 150 years old. It replaced the riksdaler as a unit of payment in 1873 and in 1874 the first Swedish krona banknote was printed. Since then, the value of the krona has been managed in a variety of exchange rate regimes: the Scandinavian Monetary Union, the Bretton Woods system and pegs to various trade-weighted currency baskets. As of November 1992, the krona has been allowed to float freely, which, together with the inflation target set in 1993 but formally introduced in 1995, constitutes Sweden's monetary policy regime.
The exchange rate plays a central role in macroeconomic developments in a small, open economy like ours. Its evolution is important for a central bank with an inflation target, even if the exchange rate is allowed to float freely, as it affects various measures of inflation and the business cycle.
The aim of this speech is to describe, in a structured manner, what affects the Swedish krona over different time horizons and to comment on developments in recent years. In preparing the speech, I have discussed with my colleagues whether we should paraphrase the writers Carver and Murakami and name the speech "what I talk about when I talk about the krona", because that is exactly what this is: what I would answer if someone asked me to try to explain the nominal exchange rate. One of the main messages of the speech is that it is possible to understand the evolution of the krona. It varies over time and is very difficult to predict, but a backward-looking analysis can provide convincing arguments as to why it has strengthened or weakened.