Riksbank’s Move Dents Krona

Reuters reports that the Swedish krona sagged 0.4% against the euro today after Sweden’s central bank enacted another measure to relieve strain on the financial system. In a move described as temporary, the Riksbank increased foreign currency reserves by 100 billion kronor in order to facilitate lending banks foreign currency.

“We still need to be prepared for the eventuality that the financial crisis may be both severe and prolonged,” said Governor Stefan Ingves.

Financial analysts say the move is a reaction to the teetering economic climate in the neighboring Baltic region. “It shows that the krona is still vulnerable to concerns about the Baltic,” reported Johanna Jeansson, an analyst at Nordea bank.

The once-booming Baltic countries, now on the edge of economic collapse, were heavily supported by Swedish lending. (ln)