Photo: flickr: Michael Caven
Trying to preserve some capital? Need a place to put your money in the midst of all this volatility? You might be considering Sweden, where there’s a budget surplus, low public debt and a supposedly strong economy.But you might want to take a second look before buying the krona.
Brown Brothers Harriman Forex chief Marc Chandler warns of a slowdown:
The economy is slowing, led by industrial production and exports, and the anticipated rate hike has been taken back by the market. June industrial output fell 3.3% on the month and the July PMI reading was just above the 50 boom/bust level at 50.1. The export sub-index was at 46.9. The August reading is due out on Sept 1 and the risk is additional deterioration.
A few more points from Chandler:
- Only the Canadian and Australian dollars have performed worse (-0.9% and -1.8% respectively) than the krona over the last three months. It’s fallen 0.5% against the dollar.
- The OMX Stockholm 30 Index under performs the Dow and is off 22% year-to-date.
- Swedish bonds may look attractive- the 2-year has double the return of a German 2-year- but gains are offset by the krona’s loss against itself.