CURRENCY WATCH


FX SEK – Swedish krona


The Swedish krona should strengthen over the course of 2018, especially following its recent, sharp correction.


Te Swedish krona depreciated against the euro in the first half of the year, from EUR/SEK 9.40 to 9.80, and subsequently recovered in the summer months, almost fully making up (to EUR/SEK 9.44) the decline incurred over the previous months. It has then resumed depreciating in the past three months, setting between November and December new lows for 2017 at EUR/SEK 10.03, close to last year’s lows at EUR/SEK 10.08. Te drop observed in the first half


of the year was mostly due to the Riksbank’s further easing of monetary policy, through the extension in April of the QE programme from June to December. Te subsequent recovery, on the other hand, was the result of the improvement of the domestic economic picture, which prompted the Riksbank to soſten its easing bias, indicating that the risk of having to resort to a rate cut had decreased. Te latest – and strongest – correction phase, on the other hand, was a


combination of weaker than expected inflation (the October CPIF1 inflation, released on 14 November, dropped below target to 1.8%, from 2.3%, against a forecast of 2.0%) and a reversal in the trend of house prices, which aſter having risen for almost two decades, stated to decrease.


Te trend of home prices is important, as in line with the Anglo-Saxon model, a rise in the value of property tends to be accompanied by stronger debt-


FX TRADER MAGAZINE January - March 2018 23


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