Read news from:
Austria
SHARE
COPY LINK

NOBEL PRIZE

Nobel Prize winners left short-changed by weak Swedish krona

Despite Sweden's Nobel prize sum this year being higher than ever, the weak krona means that a lot of foreign prize winners this year have less money than they did 20 years ago, once they convert it to another currency.

Published: 3 October 2023 11:46 CEST
Nobel Prize winners left short-changed by weak Swedish krona
Alfred Nobel. Prize winners win both a medal and a cash prize, worth 11 million kronor in 2023. Photo: Jessica Gow/TT

This year’s prize sum, 11 million kronor, gets you just under a million dollars. That’s less than two decades ago, when the prize sum was worth almost 1.3 million dollars, despite winners receiving a million kronor less than in 2023.

This isn’t the first year where the prize has been worth less for researchers based in the US, who are usually in the majority. Over the last few years, the prize sum has dipped under the million-dollar mark multiple times. Since 2000, it was lowest in 2016, when it was only around 870,000 dollars.

Despite the effect of the currency’s strength on the value of the prize, the Nobel Foundation is not planning on awarding the prize in another currency.

“In the management of its capital, the Nobel Foundation spreads its risks by investing in different currencies, but the possibility of awarding the prize in a different currency than the Swedish krona has not been considered,” Nobel Foundation press officer Annika Pontikis told TT newswire.

EXPLAINED:

The decision to raise the sum by a million kronor this year is, according to the foundation, due to the fact that there is “financial capacity” to do so.

At the end of last year, the fund was worth 5.8 billion kronor, which is invested in both shares and property, among other things, in order to ensure as high returns as possible.

The Foundation’s finances haven’t always been this good, however. In 2012, the cash prize was slashed from 10 to eight million kronor, as part of a savings programme, with it only reaching 10 million kronor again in 2020. During some of the years in between, the prize was still worth more in dollars compared to now, like in 2013 where it was worth over 1.3 million.

The Nobel Foundation aims to increase the value of the cash sum in the future, in part to ensure that the Nobel prize remains competitive with other prizes. However, Pontikis would not give more details on how much higher it will be, or when a possible increase could occur.

“A new assessment of the situation is made every year, and it is therefore not possible to comment on possible future increases today.”

Facts and figures: The history of the Nobel cash prize

1975: 630,000 kronor, equivalent to around 143,000 US dollars (worth around 4,032,000 kronor today)

1980: 880,000 kronor, equivalent to around 200,000 US dollars (worth around 3,573,000 kronor today)

1985: 1,800,000 kronor, equivalent to around 234,000 US dollars (worth around 4,653,000 kronor today)

1990: 4,000,000 kronor, equivalent to around 712,000 US dollars (worth around 7,815,000 kronor today)

1995: 7,200,000 kronor, equivalent to around 1,084,000 US dollars (worth around 1,422,000 kronor today)

2000: 9,000,000 kronor, equivalent to around 932,000 US dollars (worth around 13,923,000 kronor today)

2005: 10,000,000 kronor, equivalent to around 1,258,000 US dollars (worth around 14,411,000 kronor today)

2010: 10,000,000 kronor, equivalent to around 1,460,000 US dollars (worth around 13,152,000 kronor today)

2015: 8,000,000 kronor, equivalent to around 941,000 US dollars (worth around 10,338,000 kronor today)

2020: 10,000,000 kronor, equivalent to around 1,196,000 US dollars (worth around 11,966,000 kronor today)

2023: 11,000,000 kronor, equivalent to around 1,000,000 US dollars (on September 28th)

Source: Nobel Foundation, Poundsterlinglive.com, Ekonomifakta

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

MONEY

Why the Swedish krona is expected to strengthen in the year ahead

In the last decade, the Swedish krona has generally been weak against major currencies like the US dollar and the euro. However, some analysts believe it may strengthen in the coming year.

Published: 5 July 2024 10:29 CEST
Why the Swedish krona is expected to strengthen in the year ahead

In recent months, the Swedish krona has faced significant fluctuations against major currencies.

On June 28th, the krona lost ground following a softer-than-expected interest rate policy statement from Sweden’s central bank, Sveriges Riksbank.

After a rate cut in May (the first one since 2016), the Riksbank recently also indicated that interest rates could be reduced three more times by the end of 2024.

This announcement led to immediate reactions in the currency market.

The euro-krona exchange rate increased to 11.33 from 11.29 (meaning that you now need 11.33 kronor to buy one euro), while the pound-to-krona exchange rate rose to 13.40 from 13.34.

Despite this, some analysts believe the Swedish krona is poised for a rebound in the year ahead.

The krona’s long downward trend

In a recent report, Rory Fennessy, a senior economist at the advisory firm Oxford Economics, pointed out that the Swedish krona appeared undervalued.

Despite its underlying strengths, such as consistent trade surpluses (where Sweden’s exports exceed its imports), high productivity, solid public finances, and a credible central bank, the krona has been on a long downward trend.

Identifying a single reason for this persistent weakness over the past decade is a challenging affair.

Negative interest rates, which the Riksbank implemented in the late 2010s to achieve its inflation target, are often mentioned as an important factor.

EXPLAINED:

However, this explanation mainly accounts for the weakness against the US dollar. Around the same time, the European Central Bank (ECB) also had negative rates, yet, as Fennessy pointed out, the krona still weakened against the euro.

More recently, the Riksbank’s response to the inflation surge since 2021 has further weakened the krona.

“We think the Riksbank was slow to respond to the recent inflation shock. As late as February 2022, the Riksbank signaled in its official forecast that the policy rate would stay at zero until 2025. But by this point, broad price pressures were gaining momentum in the economy,” Fennessy said.

“At the next policy meeting in April 2022, the Riksbank started the hiking cycle, contrary to its earlier guidance, and has been playing catch up since.”

The currency roller coaster and interest rate cuts

This year, the Swedish krona has experienced significant ups and downs against major currencies.

According to Oxford Economics, this volatility has been caused by a mix of global factors and domestic events in Sweden.

Without these factors, the krona would likely have been more stable. 

READ MORE:

While inflation in Sweden is near the Riksbank’s target, the high real interest rates are hurting economic activity.

Therefore, experts expect the Riksbank to continue cautiously lowering interest rates, using this as the main tool to manage the exchange rate.

A year of gains for the Swedish krona?

After a period of significant volatility, the Swedish krona is expected to gain support from decreasing domestic risks and positive external developments, according to Oxford Economics.

“The Nordic currencies have been highly volatile this year. The Swedish krona and Norwegian krone both depreciated sharply until May but have since regained much of their losses,” said Fennessy.

“We believe both the Swedish krona and Norwegian krone will appreciate gradually this year and over the medium term, but there may be bumps along the way due to external factors and unexpected data.”

READ ALSO:

Earlier this year, the Swedish krona weakened due to stronger-than-expected US economic activity and inflation. This led to changes in interest rate expectations and negatively affected Nordic currencies.

However, recent US economic data has been weaker, and Nordic central banks have adopted stricter policies to protect their exchange rates.

According to Oxford Economics, coordinated interest rate easing across these regions should help reduce external pressures.

The road ahead

Since early May, the Swedish krona has strengthened by 4.5 percent against the euro, even though the Riksbank cut interest rates before the European Central Bank did.

At the same time, lower-than-expected US inflation and weaker economic activity have reduced expectations for interest rate hikes in the US.

These changes in global economic data and risk sentiment have been among the main drivers of the krona’s recent ups and downs.

According to the Oxford Economics report, the Riksbank has regained its credibility now that inflation is near its target, and the next challenge is for the bank to ease its monetary policy at a pace that supports the economy without causing too much volatility in the currency.

This balance is crucial for maintaining economic stability, Fennessy noted.

Looking ahead, the economic advisory firm expects that the krona will hold onto its recent gains and could appreciate by another 2 percent against the euro in 2025 – as long as there are no unexpected economic shocks.

SHOW COMMENTS