EUR/SEK likely to trade towards 9.30 by end-2017 – Lloyds Bank

The Swedish krona has been unsuccessful in capitalising on rally attempts, particularly leaving the EUR/SEK in a range of around 9.55, which is a range that has been in place since mid-July. In spite of the strength of the Swedish economy and its above target inflation rate, the Riksbank kept its key policy rate on hold at -0.50 percent in September.

However, it acknowledged the improvement, revising up its economic growth forecast to 3.2 percent for 2017 from the initial estimate of 2.2 percent, and its inflation forecast to 1.8 percent. Still, the central bank continues to be concerned about the possible disinflationary implications of rapid rise of the krona. The central bank also wishes to keep its policy stance widely aligned with that of the ECB. However, it is uncertain that these worries would continue if the data continues to strengthen, noted Lloyds Bank in a research report.

“Given the upside risk to Swedish interest rates, we retain a bias for EUR/SEK to head towards 9.30 by the end of the year”, added Lloyds Bank.

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