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Swedish Krona Declines on Extended Loans

September 3, 2009 at 13:50 by Jan Baros

Swedish kronaThe Swedish currency declined today versus the euro and most of the 16 main traded currencies as the national central bank maintained interest rate in its historic record low of 0.25 percent leaving space for speculations that the country financial system is still facing a complicated situation.

The krona declined today versus several currencies after the Riksbank affirmed that it will offer more than $10 billion to Swedish bank to avoid the current banking crisis in the country, maintaining also the current interest rates at a record low of 0.25 percent, in order to stimulate credit and consumption to rescue the country’s economy from recession. The negative news for the Swedish currency also came with a statement from the nation’s central bank indicating that interest rates in the country will remain at extremely low levels through the next year, declining attractiveness for investors to beat in Swedish assets.

Even if the Swedish economy starts to give signs indicating that the worst moments are already behind, the situation remain very uncertain, and the expected maintenance of the rates at the record low level came together with an extremely dovish tone on Riksbank statement, shunning investors from Sweden and decreasing attractiveness for the krona, which may help Swedish products’ competitiveness, selling to markets at lower prices.

EUR/SEK traded at 10.2955 from 10.3550 in the intraday comparison.

If you have any questions, comments or opinions regarding the Swedish Krona, feel free to post them using the commentary form below.

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