Swedish Currency Plummets to Lowest Level Since the Aftermath of Global Financial Crisis in 09 against the Euro

It is well known in Sweden that the current ambition is to reach and maintain 2% inflation. It seems any other goal is secondary.

 

  • The Swedish krona just hit its lowest level since the aftermath of the financial crisis in 2009.
  • Ultra-easy monetary policy with a negative policy rate is dragging down the currency.
  • Nordea Bank strategists fear further downside as investors are still long on the krona

The value of the Swedish krona has declined sharply. In the past year, the value loss against the euro is 8,6 percent, a significant move in currency markets which normally are much less volatile than equity markets. At the moment, a euro costs close to 10.50 Swedish crowns – the highest level since December 2009.

The Swedish Central Bank continues with its ultra-easy monetary policy, which is dragging down the krona. Currently, the policy rate is in negative territory standing at -0,5 percent. The price correction in the Swedish housing market has further contributed to a weakening of the currency. Since the peak in the summer of 2017, home prices are down about 10 percent.

AC

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