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Riksbank Cuts Rates, Krona Mixed at Start of Friday’s Trading

February 12, 2016 at 1:18 by Vladimir Vyun

A fan of Swedish krona notesThe Swedish krona sank yesterday following the bigger-than-expected interest rate cut from the central bank of Sweden. Today, the currency continued to move lower versus the US dollar but rose a bit against the euro.

The Riksbank slashed its main interest rate by 15 basis points to -0.5 percent. Analysts had expected a somewhat smaller cut in the neighborhood of 10 basis points.

The central bank admitted that the Swedish economy demonstrated solid performance, yet the bank also voiced concern about low inflation and developments in the global economy. Additionally, policy makers were unhappy with the krona’s strength, which in their view was excessive. Therefore, the Riksbank not only reduced borrowing costs, it also signaled about possibility of even more accommodative monetary policy:

The Executive Board therefore still has a high level of preparedness to make monetary policy even more expansionary, even between the ordinary monetary policy meetings. There is still scope to cut the repo rate further.

USD/SEK advanced from 8.3718 to 8.3783 as of 1:15 GMT today. EUR/SEK ticked down from 9.4822 to 9.4765.

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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