EUR/SEK currency outlook

The Swedish Krone has very much been taking its lead from domestic data. Headline inflation for September was firmer than August, at 0.1%, leading to an upward move in rates. However, uncertainty regarding the path of ECB quantitative easing hangs over the Riksbank, and may add pressure to further ease policy from these ultra-loose levels. 

The Riksbank's Deputy Governor, Martin Floden, recently commented that the central bank has the capacity to cut the repo rate at least one more time. However, a situation could arise where monetary policy can no longer do anything meaningful to raise inflation. 

"Monetary authorities in Sweden have limited policy options that would assist in weakening the Krone, and we doubt the ability of the central bank to meaningfully weaken the currency. Overall, a mild depreciation in the currency against the euro is likely to 9.60 by the end of the year", says Lloyds Bank.