Swedish Krona: Forecasts turned cautious – Nordea

Nordea strategists concede their long‑standing positive view on the Swedish Krona (SEK) has not materialized and now adopt an agnostic stance. SEK has been hurt by Middle East‑related risk‑off flows, US tech outperformance, Riksbank policy lagging the ECB, and the "Scandie trade" favouring NOK. They say SEK strength requires lower Oil prices, easing inflation and lower global short rates.

Krona weighed by rates and oil

"Our long-standing positive outlook on the Swedish krona has failed to materialize."

"Furthermore, The Riksbank is lagging the ECB policy rate by a full 75 basis points, an unprecedented divergence."

"As of now the SEK is a funding currency."

"To make matters worse the krona has also been weighed down by the "Scandie trade," where the NOK is supported by higher energy prices and a policy rate that sits 275 basis points higher than the Riksbank's."

"We need to see a drop in oil priceswith easing inflationary pressures and lower global short rates in order for the SEK to strengthen again."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)