The Swedish krona was extremely vulnerable today after the unemployment rate jumped to the highest level in four years and the central bank signaled that it will likely delay the planned interest rate hikes.
Sweden’s unemployment rate rose to 7.1% in August from 6.9% in July. The actual value was far above analysts’ forecasts.
Riksbank released minutes of its monetary policy meeting that happened earlier this month. At the meeting, the central bank maintained the main interest rate unchanged at -0.25%. The minutes revealed that the central bank will likely not be able to tighten its monetary policy as fast as it was planning previously:
Low interest rates abroad and worsened sentiment mean that the repo rate is thereafter expected to be increased at a slower pace compared with the assessment in July.
One member of the board “expressed doubt about the forecast that the rate will be increased towards the end of the year or at the beginning of next year”. Indeed, experts were criticizing the central bank’s plans to raise interest rates in the not-so-distant future for being overly optimistic.
USD/SEK rose from 9.6544 to 9.6772 as of 16:21 GMT today but pulled back from the session maximum of 9.7282. EUR/SEK surged from 10.6239 to 10.7040. GBP/SEK jumped from 11.9993 to 12.0925, trading near the highest level since May 29.
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