This morning saw the central bank of Sweden, the Riksbank, cut its main interest rate, the repo rate, further. Although by only 0.1%, the repo rate now stands at minus 0.35%. The central bank also announced that it was to expand its bond purchasing program by 45bn kronor.

The reason behind the moves remains the same as previous cuts, to try and jolt the Swedish economy out of a period of disinflation. To an extent this is a situation which has been forced on Swedish policy makers. Since the ECB started their quantitative easing program the Swedish currency strengthened significantly against the euro. This has hampered the Swedish policy maker’s efforts to stoke inflation in the economy.

This is not just isolated to Sweden and Europe. We recently saw the South Korean central bank cut their interest rate in an effort to weaken the Korean won against the Japanese yen. The yen had depreciated significantly against the won, making Japanese exports more competitive relative to Korean exports.

As we recovered from the credit crisis, countries around the world were tolerant of currency movements if it meant that we saw a general recovery in the global economy. The yen and euro were allowed to weaken significantly against the US dollar, with the US happy to oblige if it led to the avoidance of crisis around the world.

Moving forward however, as economies in general recover, the negative impact of a strengthening currency on a country's own rehabilitation or the corporate profits of its own exporters is starting to prove less palatable.