EUR/SEK: Krona could see a further leg higher in the coming days – ING

Riksbank is expected to hike its key rate by 75 basis points. The decision is unlikely to provide lasting support to the Krona, but another leg higher in SEK could be seen in the coming days, economists at ING report.

Riksbank to hike by 75 bps

“We expect a 75 bps hike, which appears to be very much a consensus call. We did see the RB surprise with a 100 bps move earlier this year, but that would likely be a risky move given the strains in the Swedish housing market.”

“We don’t expect major and long-lasting implications from today’s policy decision for the Krona, which is currently enjoying a rather unique combination of positive factors (on the European and global risk sentiment side).” 

“We could see a further leg higher in SEK in the coming days, but our longer-term view remains that the Krona will underperform as the eurozone enters a prolonged recession in 2023. We forecast a sustained return to levels below 10.50 in EUR/SEK only in the second half of next year.”

See – Riksbank Preview: Forecasts from five major banks, another big rate hike