The Swedish krona has hovered in narrower ranges in Q2 compared to Q1 2021 as much of the positive incoming data was offset by a clear message from the Riksbank that it will maintain loose monetary policy over the 3-year horizon. Sweden’s resilience to the recent Covid-19 measures and quick recovery prospects should support the Swedish krona going forward, while the currency also benefits from a broader global recovery given that it is an open economy. However, the SEK rally should be somewhat contained by the Riksbank’s dovish policy stance, which leads us to maintain our forecasts of a mild rally in the Swedish krona over the coming year. The appreciation in the krona will be more visible against the dollar than the euro given our expectation of euro appreciation also due to procyclical reasons, while we believe the US dollar will continue to weaken over the course of 2021.
Read our latest SEK Update in full here:
Author: Ima Sammani, FX Market Analyst