By Charles Duxbury 
 

RIGA--Sweden's prime minister on Thursday said that his country's currency looked likely to stay strong and warned domestic companies against assuming they can rely on a lower exchange rate for an edge against overseas competitors.

"Traditionally the Swedish export industry has sometimes lent on the currency falling in value as an answer to competitive challenges," Fredrik Reinfeldt told reporters in the Latvian capital. "Now I think we have to get used over time to the fact that we have a stronger currency and do other things," he said on the sidelines of a seminar.

He said that for the government's part, it had reduced corporate tax and invested heavily in research and development as a way to "keep in trim."

"You have to do that if you have a stronger currency," Mr. Reinfeldt added.

The krona hit a twelve-year high against the euro last summer and has stayed at levels fairly close to that high since.

About a third of Swedish exports go to the euro zone and exporters worry that rising costs in kronor will make the goods they sell in the common currency bloc more expensive, hitting sales.

Write to Charles Duxbury at charles.duxbury@dowjones.com