Taxpayers gain SEK 8.1 billion from The Debt Office's active borrowing
(Thomson Reuters ONE) -
During the financial crisis, the Debt Office considered the Swedish krona to be
unreasonably weak. In the course of 2009, we therefore shifted a large part of
the borrowing, equivalent to SEK 50 billion, to foreign currency. This
additional foreign currency exposure has now been wound up. Our active
management of the central government debt has generated a profit of over SEK 8
billion.
The profit is due to the krona appreciating considerably as we expected. We have
thus had to repay a smaller amount than we would have done if the debt had been
in kronor.
- If we had not made use of this possibility, there would have been a risk of
borrowing being unnecessarily expensive. Our goal is to borrow as cheaply as
possible without taking excessive risk. To achieve this, we have to be active in
our central government debt management. We continuously monitor interest and
exchange rate movements and try to take advantage of possibilities that arise,
says Bo Lundgren, Director General of the Debt Office.
Background
The krona weakened during the international financial crisis in 2009 to levels
around SEK 11.50 against the euro. At the same time, the Debt Office needed to
borrow large volumes to fund existing and expected deficits. We considered that
this lending would be unnecessarily expensive if it was concentrated on the
Swedish krona market.
We therefore gradually increased our exposure to foreign currency from January
2009 onwards. In May 2009, the government approved a further increase in our
exposure from SEK 15 to SEK 50 billion. The build-up of this position was
completed by the end of 2009.
The intention was to repay the foreign currency when the krona had strengthened.
There were good reasons for this: the weakening of the krona was not due to
domestic problems but mainly because of a fall in demand for exports and concern
about the consequences for the Swedish economy of the crisis in the Baltic
countries. We made the assessment that the exchange rate for the krona would
return to normal levels when the global economy recovered and the situation in
the Baltic economies had become clearer.
The technique
The large exposure in foreign currency was achieved mainly with the aid of
currency forward contracts where we purchased kronor for euro. This exposure was
built up at an average exchange rate of around SEK 10.70 against the euro.
On average, we closed the exposure at an exchange rate of around SEK 9 against
the euro. We started winding up the position in September 2010 and all forwards
have now been closed.
For more information, please contact:
Bo Lundgren, Director General of the Debt Office, telephone +46 8 613 46 51.
Thomas Olofsson, Head of Debt Management, telephone +46 8 613 47 82.
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Source: Riksgälden via Thomson Reuters ONE
[HUG#1526810]
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Datum: 29.06.2011 - 09:30 Uhr
Sprache: Deutsch
News-ID 55947
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Town:
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Kategorie:
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