EUR/SEK to tick down gradually in the year ahead – MUFG

During August the krona strengthened marginally against the euro from 10.195 to 10.194. Economists at MUFG Bank expect SEK to grind higher in the coming months.

Sweden’s economy to see a strong recovery

“The Fed has signalled that it plans to begin tapering QE later this year but is in no hurry to follow up by raising rates. However, those concerns have not prevented global equity markets from rising to fresh record highs which have limited the negative impact on the krona.”

“New COVID-19 cases and deaths remain relatively low in Sweden dampening the risk of further restrictions on activity. The strong recovery is expected to continue with the Riksbank projecting growth of 4.2% for this year as a whole.” 

“The Riksbank is planning to bring an end to their SEK700 B QE programme this year, after which the size of their balance sheet will be maintained until at least the end of next year. But it has no plans for rate hikes in the coming years.” 

“Overall, we still see scope for the undervalued krona to strengthen modestly in the year ahead.”