The last week has seen the SEK rally faster than expected. Kit Juckes, Chief Global FX Strategist at Société Générale, reports.
Is time running out to buy SEK for next summer?
GBP/SEK peaked at 14 in August and is down to 13.33 now but our forecast for Q3 next year is 12.50 so there should still be some merit in buying some more Krona here.
SEK has overtaken Sterling as the sick currency of Europe, which seems harsh given the country’s long-run economic performance and the healthy state of its balance of payments.
In recent months, what has held it back was the Riksbank reluctance to keep up with the ECB’s rate hiking pace, and the perception that the real estate sector is its Achilles Heel in a rising rate environment. But once rates have clearly peaked and if the sky doesn’t fall in, it’s not clear this pessimism is justified anymore.
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