Swedish Finance Minister Anders Borg rejected talk of the krona becoming a haven against the backdrop of a deepening European debt crisis and predicted the currency will fall if financial markets deteriorate. “I don’t think the krona will ever have the same role as the Swiss franc; we are two very different economies,” Borg said in an interview in Stockholm today. “If we end up with trouble in the international financial system, I’m convinced that the krona will weaken.” Borg is responding to speculation investors will turn to the krona as an alternative to the franc after the Swiss National Bank decided to cap the exchange rate in an effort to protect its export industry. The krona has surged 10.4 percent against the franc since the SNB’s Sept. 6 announcement. Sweden’s currency is likely to strengthen against the euro, according to Danske Bank A/S. The krona should reach 8.9 versus Europe’s single currency “in coming weeks,” the bank said Sept. 7. The krona fell 0.4 percent against the euro today to trade at 9.0909 at 10:35 a.m. in Stockholm. Against the dollar, it lost 0.7 percent. The krona “might just as well weaken,” Borg said. “If there is an accident in the European financial system it’s very likely that the exchange rate will be hit hard.” Sweden’s central bank this month abandoned a planned interest rate increase after global market turbulence threatened the recovery outlook in Europe and the U.S. Policy makers signaled they may still raise rates once more this year to 2.25 percent. Borg slashed Sweden’s economic growth forecast last month and estimates the largest Nordic economy will grow 1.3 percent next year, versus a previous forecast for 3.8 percent. Sweden’s economy is prone to “big fluctuations,” meaning it’s “hard to believe” the krona will ever become a haven currency, Borg said. To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

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