Swedish Krona Strong After Riksbank Leaves Rates Unchanged

The Swedish krona gained today after the nation’s central bank decided to keep interest rates unchanged and signaled about possibility of a hike in the future.
The Riksbank left its main interest rate at -0.25% at today’s meeting. Such decision was widely expected by market participants. The central bank cited following reasons for its decision:

Economic activity in Sweden remains strong and inflation is close to the target of 2 per cent.

Furthermore, the bank signaled that it expects borrowing costs to start rising this year or the next:

The forecast for the repo rate is also unchanged and indicates that it will be increased again towards the end of the year or at the beginning of next year.

As for developments outside of Sweden, the bank commented:

Developments both in Sweden and abroad are largely in line with the Riksbank’s forecasts. However, increasing unease over further deterioration in trade relations and a faster decline in global economic activity have clearly affected pricing on the financial markets, where interest rates on the whole have fallen. But growth abroad is relatively good and confidence among both households and companies indicates normal growth in the coming period. With the information now available, the Riksbank assesses that there is no reason to make any major adjustments to the forecasts for international inflation and growth.

USD/SEK declined from 9.3291 to 9.3071 as of 16:22 GMT today. EUR/SEK dropped from 10.5288 to 10.5011, and its session minimum of 10.4860 was the lowest since April 23.

If you have any questions, comments, or opinions regarding the Swedish Krona, feel free to post them using the commentary form below.

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