To change or not to change

When I created my spreadsheet in Google Sheet, I chose to set a fixed exchange rate of 1 USD equal to 10 SEK, which was generous at the time. Since 2017, I have had tolerance on my side, but this year the exchange rate has fallen below 10 SEK.

According to wise.com, the lowest level of 1 dollar against the Swedish krona so far this year is 9.2267 SEK, reached on September 17. This means that we will miss our dividend target for almost every month, except for the first three months of the year.

The future exchange rate as of December 31, 2025 determines whether I will adjust the fixed exchange rate in my Google Sheet for the first time.

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The Swedish krona is inexplicably strong given the current economic climate

A strong Swedish defense industry, together with increasingly high inflation, is slowing the prospects for future policy rate cuts. The less Sweden lowers its policy rate, the more the Swedish krona can strengthen against other currencies, says SVT's economic commentator Alexander Norén. The combination of Swedish inflation, together with the geopolitical situation and uncertainty about US tariffs, has caused the Swedish krona to move sharply.

For example, €1 cost 10.99 SEK on March 6, 2025. It was the first time in two years that the euro fell below 11 SEK. On the same day, $1 cost 10.19 SEK, which should be compared to 10.80 SEK the week before. The development can be partly explained by the fact that the chance of further policy rate cuts in the near future from Sweden's central bank AKA the Riksbank is now considered extremely unlikely.

In addition, the outside world believes that there will be more investments in Sweden and that more goods and services will be purchased from Sweden, not least because there will be major defense investments in Europe and Sweden has large defense companies that export. Sometimes a few signals that the Swedish krona is undervalued can be enough to start a positive spiral that Sweden seems to be in right now.

If you want to be a little conspiratorial, you can suspect that there is an underlying agenda between Sweden and the EU to strengthen the Swedish krona ahead of a rapid transition to the euro in Sweden. Who knows, maybe Sweden will replace the Swedish krona with the euro in the near future.😉

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This is going to be too exciting

The US dollar has lost a little in value compared to the Swedish krona during February 2025. This means that our dividends for January will be marginally higher compared to the dividends for February after they have been converted to Swedish kronor.

The reason for this is because I set a fixed "exchange rate" in my Google Sheets during January for the entire year that I will not change, assuming no major change occurs, which means that it will be a bit "tight" to reach the forecast for February this time.

So far, the numbers show that I will miss the target by just under $30, which may be considered negligible by many but certainly not by me. How close I get to my goal depends entirely on the exchange rate applied by our respective banks when they pay out February's final dividends.

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Mixed bag

Historically, in the last 30 years, the Swedish krona has never been weaker compared to the US dollar than it is right now. This means that almost everything Sweden imports has increased or is increasing in price. While Swedish products have become cheaper for the rest of the world to acquire. In addition to the price increases, trips abroad have also become expensive for those who pay with the Swedish krona.

On the other hand, one of our acquaintances who is an American citizen who is employed by an American company but stationed in Sweden and gets his salary paid in dollars, has had a actual salary increase recently thanks to the development of the Swedish krona.

For us personally, the weak Swedish krona is in our favor if I only consider our investments because 99% of our investments are placed in US dollars. December is likely to be our best dividend month in all of 2024 and the exchange rate differential is, albeit a small, a contributing factor.

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Everything was not better before

The current performance of the Swedish krona can be compared to British ski jumper Michael Edwards "Eddie the Eagle" who finished last in the 1988 Calgary Olympics, while the US dollar can represent Finnish ski jumper Matti Nykanen who won the same event.

At closing yesterday, the current exchange rate was 1 USD equal to 11.04 SEK, which can be compared to the exchange rate on November 24, 2014, which was 1 USD equal to 7.42 SEK. Although this development is fantastic for our portfolio value, which consists of 99% American stocks, it means that we Swedes are becoming significantly poorer compared to the rest of the world.

Thanks to the "newer" online banks such as Avanza and Nordnet, which provide a platform with a user-friendly interface for private individuals at competitive prices, today it is much easier to "currency hedge" your savings by buying American or European stocks compared to the dark ages when the world's most perfect husband bought his first stock.

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The Swedish krona has become less weak lately

Today our holding reached ATH calculated in USD while the actual value for us, which is the portfolio value converted to SEK, decreased. The reason for this is that the Swedish krona continues to gain ground against both the euro and the USD. For every penny that the dollar falls in value compared to the krona, exactly all of our holdings are negatively affected, in terms of value.

A good outcome of a stronger krona is that we get more for every krona. A bad outcome will be that our actual dividends will be lower compared to the months when the Swedish krona was weaker compared to today's exchange rate.

Opinions differ widely when it comes to the value of the Swedish krona. There are those who believe that the Swedish krona is undervalued, even one of the world's most undervalued currencies, while there are those who believe that the Swedish krona will lose more against the dollar and the euro.

The Swedish krona, which is a small currency, is much more influenced by the outside world than, for example, both the euro and the krona. In addition to external factors, declining domestic risks and positive external developments are very significant for the smaller currencies. Sweden has major problems with gang crime, which we currently "export" to Norway, Denmark, Finland, Spain and even Iceland.

Our current government has a massive job that will take 5-10 years to clean up after the last government who was far too lenient on crime. If they succeed in reversing the negative trend, it will strengthen the Swedish krona.

I am one of the guilty

The major Norwegian bank DNB is flagging that the Swedish krona is overrated and will lose value against both the US dollar and the euro in the coming months. The Swedish krona strengthened after the US central bank, the Federal Reserve (FED), cut the policy rate by 50 points on Wednesday. After the sharp weakening of the krona in recent years, it is basically unchanged since the turn of the year against the euro and the US dollar. But anyone hoping for a clear strengthening of the krona in the coming year will be disappointed, according to DNB.

Within a 12-month period, DNB believes that the Swedish krona will weaken by a further 4% against the euro. According to the same bank, the US dollar will also become more expensive for the Swedes. The background to the weak Swedish krona exchange rate is, among other things, a continuous savings surplus in Sweden, which is used, among other things, for investments in securities denominated in euros and dollars. In the short term, the financial flows are absolutely decisive for the krona exchange rate, in contrast to the general opinion that it is the commercial flows according to DNB's chief economist Ulf Andersson.

DNB is not the only player predicting a gloomy future for the Swedish krona, Nordea also predicts a weakened krona exchange rate, although Nordea sees a glimmer of light in that Sweden is now entering a period of lower policy rates, which is usually better for the krona.

Our little family has all our savings on Wall Street, so we are very complicit in the possibly dreary future that awaits the Swedish krona.

Sweden above all

The Swedish krona strengthens further against the US dollar and has reached a new annual high for 2024. To exchange 1 USD costs 10.18 SEK at the exchange offices. Our total portfolio value reached a new ATM calculated in USD yesterday while our actual value in SEK is 6.75% lower than ATM. This makes it clear that the exchange rate for us is the strongest variable of the value of our portfolio calculated in SEK.

As a Swede, I am grateful that the Swedish krona and thus confidence in Sweden and its economy is strengthened, while on a personal level I am equally grateful that we have all investments in USD because I am convinced that it is the only right long term.

Yesterday the Swedish krona had its strongest position in 2024 at 1 USD to 10.15 SEK, which is closer to my prediction that a 1 USD will not cost less than 10 SEK this year than I feel comfortable with for my prediction to hold.

However, I put Sweden's best interests first and hope that my prediction turns out to be wrong.