The impact of the exchange rate on consumer prices in Sweden

Economic Commentaries, News The krona's fluctuation against the US dollar may have a lower impact on consumer prices than the krona's fluctuation against the euro. This is shown by authors Stefania Mammos and Dmytro Stoyko in a new Economic Commentary that examines how consumer prices in Sweden are affected when bilateral exchange rates for the Swedish krona change.

The relationship between changes in exchange rates and prices is called the exchange rate pass-through. The pass-through can affect inflation and the real economy and thus monetary policy. Currencies in small open economies such as Sweden tend to be particularly volatile, which may further reinforce the importance of pass-through for monetary policy.

The authors show that when the Swedish krona weakens against the US dollar, it has a lower impact on consumer prices in Sweden than when the Swedish krona weakens against the euro. One possible explanation is that the Swedish krona tends to weaken against the US dollar in situations of heightened economic uncertainty and weak domestic and global aggregate demand.

However, the results contain a non-negligible degree of statistical uncertainty, which means that the impacts could be the same for the dollar and the euro. The authors believe that further work is needed to obtain clearer results.

Authors: Stefania Mammos and Dmytro Stoyko, who work at the Monetary Policy Department.


Economic Commentaries are brief analyses of issues with relevance for the Riksbank. They may be written by individual members of the Executive Board or by Riksbank staff. Staff commentaries are approved by the relevant head of department, while Executive Board members are themselves responsible for the content of the commentaries they write.

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Updated 28/06/2024