STOCKHOLM: Swedish Deputy Central Bank Governor Cecilia Skingsley said on Friday that with inflation now on target there would be no problem if the crown currency significantly strengthened after tumbling against the euro and dollar in recent years.
The Riksbank has come under intense pressure in recent weeks over the crown, which has been trading around its weakest level for a decade against the euro and in 17 years against the dollar despite years of strong economic growth.
Critics blame the Riksbank for the weak crown and say it could damage the economy in the longer term, reducing the need for Swedish exporters to become more efficient and creating uncertainty that hampers investment.
After years in which the central bank has warned about a rapid strengthening in the crown, Skingsley said the currency was no longer a major issue.
"I make the assessment, with inflation back on target, that a significant crown strengthening is not a problem for me," Skingsley told reporters on the sidelines of a presentation.
The crown was stronger on the day against euro and dollar and analysts said Skingsley's comments had buoyed the currency.
The Riksbank has long had a forecast for a stronger crown, but negative rates and worries about the global economy have trumped Sweden's fundamental economic strength.
Critics say that not only are Swedes poorer as a result, but the competitive boost from a weak crown may leave exporters uncompetitive when the crown does get stronger.
"There is no pressure for change," the daily Svenska Dagbladet quoted Jacob Wallenberg, chairman of holding company Investor, as saying earlier this month.
"That's a problem."
Investor is a major shareholder in leading Swedish industrial firms such as Ericsson, Atlas Copco and Electrolux.
Skingsley, however, dismissed the argument.
"The companies we meet say that competitive pressure is strong and if that is strong, so is the pressure to be more efficient," Skingsley said.
Many, however, remain worried.
"When the crown loses value and you cannot really say why, it creates uncertainty about what's going on in Sweden," said Robert Bergqvist, chief economist at bank SEB.
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