What is USD/SEK?
USDSEK is the currency pair symbol in the foreign exchange (forex) market, representing the exchange rate between the United States dollar (USD) and the Swedish krona (SEK). In this pair, the first currency (USD) is the base currency, and the second currency (SEK) is the quote currency. This means that the value of the USDSEK pair indicates how much Swedish krona (SEK) is needed to purchase one United States dollar (USD).
The Swedish krona (SEK) was adopted in 1873 as part of the Scandinavian Monetary Union, a monetary accord that included Norway and Denmark. This monetary union was in place until World War I. Following that, Sweden faced the prospect of joining the eurozone and adopting the euro as its official currency in later years. However, the majority of the Swedish people were strongly opposed to the currency transfer, wanting to keep the krona as their national currency. Sveriges Riksbank, Sweden's central bank, regulates the krona, which is widely regarded as a stable currency within the context of a robust European economy.
The US dollar is renowned as the world's most traded currency and is widely held by central banks and esteemed financial institutions. It serves as the official currency in several nations, including Ecuador and El Salvador, where its adoption has addressed currency stability concerns. Thanks to the stability and reliability of the US economy, the dollar is the preferred choice for international transactions and reserves. Its dominant role in global trade often makes it a benchmark for nations opting to fix or peg their currencies to the value of the US dollar.
What affects the price of the USD/SEK pair?
Sweden is a major oil producer, and therefore fluctuations in oil prices can directly affect the Swedish economy and, consequently, the value of the Swedish krona.
Central bank decisions and interest rate announcements can also affect the pair. The US Federal Reserve and Sweden’s Riksbank set their respective interest rates. Higher interest rates tend to attract foreign investors seeking better returns, leading to increased demand for the currency with the higher interest rate. This can cause the value of that currency to appreciate relative to the other currency in the pair.
Another element that affects the relative value of the currencies is the trade balance between the US and Sweden. A trade surplus in one region can lead to currency appreciation, while a trade deficit can lead to currency depreciation.
What to watch out for when trading USD/SEK?
Keep a watch on data releases and statements from influential organisations in the United States, Sweden, and the Eurozone when trading USDSEK.
- US Federal Reserve and Sveriges Riksbank Interest Rate decision
- US, Sweden, and the Eurozone Consumer Price Index (CPI) inflation numbers
- US and Sweden's Gross Domestic Product (GDP) figures
- Unemployment Rate for the US and Sweden.