Sep 19 2026 04:14 AM EST

Swedish Krona Weakens Against Korean Won as Trade Deficit Narrows and US Dollar Gains Strength

September 19, 2026

The SEKKRW currency pair slipped 11.5% over the last three months, reflecting a combination of Swedish trade‑balance pressure, a steady Riksbank policy rate, and a strengthening U.S. dollar, while the Korean won benefited from a surge in semiconductor exports.

Trade‑Balance Pressure on the SEK

Sweden’s current‑account surplus narrowed sharply in the first half of 2026. July 2026 recorded a trade surplus of SEK 1.2 bn, down from SEK 3.5 bn a year earlier. Imports rose 5.7 % YoY to SEK 158.7 bn, while exports increased only 4.1 % to SEK 159.9 bn. The widening deficit on the services side (SEK 31.3 bn deficit) and higher import growth have eroded the surplus that traditionally supports the krona.

The Riksbank kept its policy rate at 1.75 % on 20 Aug 2026 and signalled no immediate change ahead of the 24 Sep meeting. Inflation remains well below the 2 % target (CPI up only 0.3 % YoY in August), limiting the case for a rate hike that could bolster the SEK. Consequently, the currency has been vulnerable to external pressures.

Korean Export Momentum Boosts the KRW

South Korea’s semiconductor sector posted extraordinary growth in mid‑2026. August 2026 semiconductor exports surged 209 % YoY to US $46.65 bn, accounting for 47.5 % of total exports. The AI‑chip segment alone grew 199.5 % YoY. This export strength has lifted the Korean won, contributing to a 14.3 % decline in the KRWSEK pair over the same three‑month window.

Even though the Bank of Korea intervened in November 2025 with forward swaps to curb the won’s slide, the underlying export momentum has kept the KRW firm against regional peers, amplifying the relative weakness of the SEK.

Monetary‑Policy Divergence and Dollar Influence

The U.S. dollar index (DXY) closed at 100.20 on 18 Sep 2026, up 1.81 % year‑to‑date. Federal Reserve rate hikes continue to support the dollar, creating a headwind for both the SEK and KRW. However, the SEK is more sensitive to the dollar because of its smaller export base and higher import exposure. Spot USD/SEK stood at 9.8296 on 19 Sep 2026, implying a modest depreciation of the krona against the greenback.

Consensus forecasts for SEK/USD suggest a gradual weakening to 0.1048 by Q3 2026 (+3 % on a quarterly basis), reinforcing the view that the SEK will remain under pressure unless Swedish trade fundamentals improve or the Riksbank adopts a tighter stance.

Market Positioning and Outlook

Over the past five days the SEKKRW pair fell 5.1 %, extending a broader six‑month decline of 12.2 %. The move reflects a re‑pricing of the SEK’s trade‑deficit risk and the continued strength of the KRW on export fundamentals. Positioning data from FX dealers indicates net short exposure to the SEK, consistent with expectations of further downside.

Key variables that could reverse the current trajectory include: (1) a surprise Riksbank rate hike at the 24 Sep meeting, (2) a faster‑than‑expected rebound in Swedish export growth, or (3) a depreciation of the U.S. dollar driven by easing Fed policy. Conversely, a further widening of Sweden’s trade deficit, continued U.S. dollar strength, or a slowdown in Korean semiconductor demand would likely deepen the SEK’s weakness.