Speaking on the sidelines of a conference in southern France, Borg said the krona had appreciated strongly during the past year but that process seemed to have halted despite a series of interest rate rises by Sweden's central bank.

The Riksbank has raised rates six times since last summer from historic lows during the global financial crisis and has signalled continued hikes through this year and next.

"The krona is now moving sideways rather than appreciating. Partly that is due to the fact that people are more uncertain about the recovery in the world economy but the fiscal turmoil in Europe is also having an impact on us," he said.

Borg suggested that Sweden's growth rate was set to cool to an average of around 3 percent in the years ahead.

Sweden's economy expanded 6.4 percent year-on-year in the first quarter, down from a record 7.7 percent in the final three months of last year.

"It is quite obvious that the fiscal turmoil and also the weakness of the US economy has an impact which makes the downside risks for growth much, much more pronounced," he said.

Copyright Reuters, 2010