In Tenel, go to the blacksmith's shop and talk to him. He will give you a Fruit 
Knife. Go to Madril and enter the shop. Talk to the kid at the counter. He will 
offer you 300 Sukel for the knife. Do not accept his offer, and tell him that 
you will think about it. Start a new conversation with him and he will offer you 
400 Sukel, which you can accept.

When you get a new sword, sell your other weaker swords.

When you get though the Aquatic Ruins, you can keep returning to fight the earns 
to get more Sukel and experience.