The Swedish krona is the second-worst performing G10 currency year-to-date. While in the first parts of the quarter, this was due to the Riksbank relaying substantially more dovish communications than other central banks in the DM space, eventually it was the war in Ukraine that pushed EURSEK above the 10.9 level to rates last seen in May 2020. Since then, the krona has ripped over 4.5% higher against the euro as risk sentiment stabilised and Riksbank’s Governor Stefan Ingves stated the central bank will probably have to raise rates earlier than 2024. Looking ahead, we expect Sweden’s inflationary backdrop to force earlier rate hikes by the Riksbank, and have adjusted our forecasts accordingly. Revisions to our longer-end calls were milder as we expect hawkish communications from the ECB to balance out the move in EURSEK.
Read our latest SEK Update here:
Author: Ima Sammani, FX Market Analyst
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