If I want 500€ I need to pay 6000 SEK. What is it that decides which currency is the strongest? Like in Sweden the SEK is reaaally low right now. Why?
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It really has nothing to do with how much currency a country prints, or how much money is in a given financial system at all.
What actually determines the value of one currency (say, the Krona) relative to another (say, the Euro) is how many Europeans want to buy Swedish goods and how many Swedes want to buy European goods. When a Swede wants to buy something in Europe, she needs to trade in her Krona for Euros, and vice versa when a European wants to buy something in Sweeden. If more Swedes want Euros than Europeans want Krona, then the Krona becomes weaker relative to the Euro because the Swedish Euro-buyers are all competing against one another for the available Euros, driving the price of a Euro (in Krona) up.
It’s worth noting that a given currency is only strong or weak relative to another currency, not in any absolute way. It’s totally possible for the Krona to be weak against the Euro but strong compared to the Yen or the Dollar.
It’s also worth noting that strong and weak aren’t value terms. A weak currency, in other words, is sometimes desirable for a country. If the Krona is weak relative to the Euro, then it’s comparatively cheap for Europeans to buy Swedish goods – good news for Swedish businesses. At the same time, it’s bad news for Swedish customers of European goods.
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