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Currencies
SWEDISH KRONA
Introduction | Overview | Structure | History | Factors affecting change in exchange rates | Daily trend of Swedish krona | Weekly trend of Swedish krona
Introduction


Krona is the national currency of three European countries that are Sweden, Iceland, Faroe Islands. The most important of all among these krona currencies is the national currency of Sweden that is called Swedish krona. The current Swedish currency came into existence in the year 1873 when it replaced the prevailing currency of that time - riksdaler. Swedish krona is also termed as "Swedish crown" and "Couronne suédoise" in the French language. The currency is often depicted with "kr" and is called "kronor" in plural form. "Öre" supports the currency as its subunit, in plural terms it is known as "ören". ISO 4217 regulation describes the currency code and numeric code for Swedish krona as SEK and 752 respectively. The word "krona" or "krone" means "crown" in English language.

Overview


Swedish krona is one of the few, still prevailing, currencies in Europe, most currencies having being replaced by euro. Swedish krona is the most dominant currency amongst the other existent krona currencies. It is the eighth most traded currencies in the world and is actively traded in the world market. The country is basically a net exporter and has been enjoying a sustained growth and stability over a decent period of time. The currency somewhat helps this growth rate to keep strong. As krona is indulged in a large amount of foreign trade, the value of the currency is dependent upon the economic status of other countries. Also, the exchange rate of Swedish krona that was floated in 1992, is largely dependent upon the monetary policies of the country.

When the European continent was planning to establish a common currency for all the countries in 1997, Sweden refused to give up its own currency, but the country has to convert its krona to euro at some point or the other as it would be joining the Euro zone according to the "Accession Treaty", 1995. The Swedish referendum held in 2003 suggested an opposition regarding the adoption of euro and that is why it is still continuing with krona as its currency. The import and export of all the currencies in the country is free. Many a previous krona currency notes were discontinued and are no longer redeemable now except the 500kr note that was withdrawn from circulation in 1989 and is still redeemable.

Structure

The Swedish krona is managed and distributed by the Sveriges Riksbank i.e. the central bank of the country. The bank gets the banknotes printed from Tumba Bruk, a printing company that was established by the Sveriges Riksbank for the manufacture of currency banknotes. Recently, this printing company has been sold to the current owner, Crane Paper company. The coinage in the currency is issued in 5 denominations, 50 öre coin being the smallest value among them. The other denominations are 1kr, 2kr, 5kr, 10kr, the 2kr coin being rarely used. The appearance and design of the coinage in Swedish krona is taken care of by the General Council of the Riksbank. The side showing the denomination of the coin has two letters engraved on it besides the denomination, the left letter standing for the initially of the place the coin has been minted and the letter on the right stands for the initial of the bank’s governor's name. The other sides of different coins depict different symbolic images. Besides the currency coins, there is a long list of commemorative coins that had been issued on various occasions and achievements in gold, silver, Nordic gold, copper/nickel having values 2000kr, 200kr, 50kr and 1kr respectively.

The krona banknotes are also issued in 5 denominations - 20kr, 50kr, 100kr, 500kr and 1000kr. The notes bear signatures of the chairman of general council and the governor of riksbank. The notes of different sizes and colors, 20kr note being bluish purple, 50kr note being yellow, 100kr note having light blue color, 500kr being reddish gray in color and 1000kr note is in yellowish gray color. In 2004, a commemorative 100kr banknote was also issued by the central bank of the country on the occasion of Tumba Burk paper mill’s 250th anniversary.

History


Sweden was using riksdaler as its currency till 1873 when the currently prevailing currency that is the Swedish krone replaced it. The riksdaler served as the country’s national currency for a long time as it was being used since 17th century. The name riksdaler was taken from the German word "thaler", from which the names of other European currencies were also taken such as "Reichstaler" (German currency), "Rijksdaalder" (currency of Austria-Hungary) and "Rigsdaler" (currency of Denmark-Norway). This old currency had a complex subunit division system consisting of mark, öre, penning and later on skillingar and runstycken. In 1885, the Swedish currency adopted the decimal system with the introduction of a new version of the currency that was the "riksdaler riksmynt".

Swedish krona came into existence when the country agreed to join the Scandinavian Monetary Union, the other members being Denmark and Norway. These three countries fixed the value of their respective currencies against gold to gain monetary stability. This union lasted until the World War I resulting the countries to lose their pegs to gold. Sweden held on to the same currency and same name of the currency even after the monetary union was discarded. The same currency is in operation till date even though the other two currencies of the union have switched over to the euro in recent times.

Factors affecting the exchange rates between two countries


The volatility in the foreign exchange rates depends upon a numerous macro economic factors that have different degrees of importance to different economies of the world. Some special and exceptional factors affecting the rates may also exist in the case of different countries. Following are shown the common factors on which the foreign exchange rate depends

  • Flow of imports and exports between the countries
  • Flow of capital between the countries
  • Relative inflation rates
  • Fluctuation limits on exchange rate imposed by the governments of the countries
  • Merchandise trade balance
  • Rate of inflation in the country
  • Flow of funds between the countries for the payment of stock and bond purchases
  • Relative growth
  • Short term and long term interest rate differentials
  • Cost of borrowings
 
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