The Riksbank, in response to Riksgälden’s proposed guidelines for managing the state debt for 2024-2027, asserts that they align with the requirements set by monetary policy. However, the Riksbank’s board notes a significant depreciation of the krona since 2021, considering it currently undervalued. This depreciation complicates achieving the inflation target amid high inflation.
The board suggests that, given the current scenario, the government and Riksgälden should contemplate pausing or at least slowing down the reduction of the state debt’s currency exposure. Although the reduction is not expected to have significant direct effects on the exchange rate, it is deemed unfortunate that Riksgälden, following the government’s decision, sells Swedish kronor while the Riksbank buys them, especially when the krona has weakened for an extended period without justification. Investors may find such an arrangement challenging to comprehend. Considering the undervaluation of the krona, a pause in this reduction should not lead to higher borrowing costs for the state.