Losses in the Krona over the past week have exceeded those of any other G10 currencies. Economists at ING note that SEK recovery path remains very narrow, and almost fully dependent on market dynamics.
It is up to the market to turn the tide for the Krona
“The near-term outlook remains grim and it will almost entirely be up to market dynamics to change the tide for the Krona.”
“We think EUR/SEK could trade within a volatile 11.40/11.60 range into and shortly after the 29 June Riksbank meeting.”
“The best news for SEK would probably be an upside surprise in May inflation numbers, that could help the Riksbank sound more hawkish.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Read More
The Swedish Krona (SEK) is experiencing a period of stagnation, and the outlook heading into the near-term future remains grim. According to ING, the EUR/SEK rose to a high of 10.61 in early November, but has since been on a downward trend. ING analysts believe the Krona is likely to remain under pressure in the coming months, given a challenging macroeconomic environment.
The SEK’s stagnation is largely due to the effects of the coronavirus pandemic, which has caused a severe economic contraction in Sweden. According to the National Institute of Economic Research (NIER), the Swedish economy will shrink by 4.7% in 2020 and is expected to grow by only 4.2% in 2021. Meanwhile, the European Central Bank has signaled its intention to maintain its accommodative monetary policy stance, which should help to support the Euro relative to SEK in the near-term.
Furthermore, inflationary pressures are also likely to keep the Krona weak. According to the latest data, Sweden’s consumer price index (CPI) rose by 1% in October compared to the previous year. This is well below the ECB’s inflation target of 2%, and suggests that the Swedish economy is still facing deflationary pressures. Combined with the ECB’s accommodative stance, this should help to keep the pressure on the Krona, which should remain relatively weak in the near-term.
In summary, the near-term outlook for the SEK remains grim, according to ING. The Krona is likely to remain weak due to a challenging macroeconomic environment, combined with deflationary pressures and the ECB’s accommodative stance. This should help to support the Euro relative to the SEK in the coming months.
