Monday, September 8, 2014

Exchange rates

The dollar has strengthened a lot against the kronor lately. It's over 7.1 to the dollar today. (There's a real-time widget along the right edge of the blog below.)

I wonder if I should add to my little bank account over there....

UPDATE: I think perhaps I should explain why the kronor is weakening right now. I'm no financial expert by any means, but I see three factors.

First, as the Economist explained earlier this summer, Swedish authorities may have raised interest rates too quickly in relation to other European economies, which dampened the country's economic recovery.

Second, the overall economic climate in Europe is weaker than America's, and is in some ways, getting worse. The European Central Bank recently lowered their interest rates to near zero in a surprise move to stimulate the eurozone's economy. So, by comparison, the dollar looks stronger.

Lastly, Sweden has an election this Sunday. To put it simply, the current center-right government is trailing in the polls to the more traditionally leftist parties. Although the facts are more complicated, the overall fear is that a new government would be more socialist and less business-friendly. This concern causes the economic markets to look less favorably on doing business in Sweden, hence the pressure on the kronor.

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