The Swedish krona has been one of the best performing currencies as investors have searched out safe havens. The Guggenheim CurrencyShares Swedish Krona Trust (NYSEArca: FXS) has risen as the krona is at a 12-year high against the euro.
“Because of Swedish companies’ international focus the krona has tended in the recent past to correlate particularly well with the U.S. S&P 500 stock index. The S&P was up 7 % since the beginning of June at 1,401 when European trading closed on Thursday. Over the same period the krona was 8 % higher against both the greenback and the European single currency, with rates at the European close of 6.7 krona to the dollar and 8.2 to the euro,” David Turner wrote on Institutional Investor. [iShares Plans Active Currency ETFs]
Swedish banks have remained healthy despite the Eurozone debt crisis, and the country has maintained its “AAA” credit rating from the three major agencies, reports Jason Jenkins for Investment U.
The healthy export-driven economy has risen 2.1% over the second quarter 2012, and steady interest have kept the krona elevated. The International Monetary Fund forecasts that the country will not report a deficit nor a surplus in 2012. [Currency ETFs Look to Fed for Clues]
FXS, an ETF tracking the krona against the U.S. dollar, has gained about 5% over the past month. The ETF costs about 0.40% and has around $67 million in assets.
The krona “has both cyclical and structural forces propelling its move higher,” said HSBC in a recent note. “In a world of so many ugly currencies” — ugly because of poor economic fundamentals — “this combination can be very powerful.”