Danes are shopping in Sweden because of the historic drop in the Swedish krona. Will this continue?
The Emporia shopping center in Malmö is teeming with Danes shopping, and many Danes are currently flocking to Sweden for shopping, due to the historically low Swedish krona, according to TV2. On Thursday, the Swedish krona hit its lowest value, reaching 0.625 against the Danish kroner (meaning that 100 Swedish kronor is equivalent to 62 Danish kroner).
Regarding the presence of many Danish signs in the parking lot of the large Emporia shopping center in Malmö, southern Sweden, near the Danish border, Danish Christina Holst, who serves as Marketing Director at Emporia, commented that in the five years she has been in her job she has never seen so many Danes as she does now, and she is happy about that.
When shopping in Sweden, the Dane saves a lot of money because of the low value of the Swedish krona compared to the Danish krona, and also because of the low value-added tax on everyday goods in Sweden.
Consequences of the Swedish krona's weakness
Ten years ago, the Swedish krona was at 0.89, and since then it has been declining, currently reaching its lowest level in 40 years, with the exception of a few days during the financial crisis in 2009.
According to Allan Sørensen, chief economist at Dansk Industri (DI), the decline in the Swedish krona is due to both Swedish and international conditions. He told TV2 Kosmopol that the Swedish currency does not have a fixed exchange rate, unlike the Danish krone. He explained: “The Swedish krona can fluctuate, and we are seeing this a lot now, given the weak growth in Sweden and the significant uncertainty in the global economy and monetary policy. Therefore, investors are losing their appetite for the Swedish krona, and consequently, its price is falling.”.
He continued, regarding the consequences: “What hurts Swedes the most is that they have high inflation, and when the Swedish krona is as low as it is now, it is more expensive for Swedes to buy from abroad, and this contributes to keeping inflation high in Sweden. The decline in the Swedish krona can also have consequences here in Denmark, as can be seen in the Danish city of Helsingør, where Swedes have decreased their purchases from Danish stores.”.
A continued decline in the Swedish currency's exchange rate looms.
For the benefit of shopping enthusiasts, Danish industry (DI) does not expect the Swedish currency to rise again at the moment, with Allan Sorensen telling the source: “I think we have to get used to the fact that the Swedish krona will continue at this very weak level that we are seeing now.”.
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