When someone comes to Sweden, currency conversion is something that is at the top of their minds. From converting the prices of food to worrying while buying literally anything. And when the Swedish Krona (SEK) falls compared with the Indian Rupee (INR), people get worried that their earnings are falling. No, it’s not. You are spending in the same currency you are earning. Sweden is more expensive than India – sooner you accept that, it becomes better. The only time it becomes relevant is when you are sending back money to India. Even then the volatility is beyond our control.
Why does SEK fluctuate?
Swedish Krona is a small currency with limited demand. Whenever any event creates global turmoil, SEK tends to weaken. The current crisis due to the Russia-Ukraine war has affected the Krona as people tend to switch to a safe haven currency such as the dollar. INR has also dropped compared to the dollar, but its fall is lesser than that of Krona, which resulted in a drop in exchange value – from a high of 8.99 INR per 1 SEK to current levels of below 8 INR. However, even before the current crisis, SEK had been falling over the last decade. “With respect to the euro, the krona has been continuously depreciating from March 2013 to March 2020, with a cumulative real depreciation of about 30 percent,” Riksbank said in a report.
Will SEK go up against INR?
It is very likely. The SEK has firmed up to nearly 8 INR after dropping to as low as 7.17 INR for every Krona earlier in 2022. A halt in the Russia-Ukraine conflict will add to the strengthening of SEK. Both are however exposed to a strengthening dollar. SEB Bank expects a “material appreciation” in 2023. “We remain cautiously optimistic about a SEK recovery in early 2023,” said researchers at ING. However, do remember, no one has a crystal ball and forecasts may change with evolving situation.
What can I do to protect from volatility?
You face currency volatility only when you convert from SEK to INR. When the SEK is weak, it’s better to refrain from converting. You can either keep your SEK in a savings account in Sweden and get about 2% interest rates or move it to your NRE/FCNR accounts and get over 6% interest rates. You can keep it in dollars or euros. Convert to INR when things get favorable.
Do you need to send money to India regularly?
There are three options that you could choose from:
- Use your money in India to pay for family maintenance and others expenses. When that fund depletes or currency exchange rates become favorable, transfer from your Swedish savings to rebuild that fund.
- If sending from Sweden is your only source, keep a track of the currency move over a period of 15 days. Many times a currency moves in a particular band for some time. Identify the topline move and transfer money when it hits the target. This process might require an understanding of currency markets and trading knowledge.
- If you don’t want to take a headache, don’t bother about the rates. Just send it when you need to send it. (READ: Transferring Money To India)
