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Swedish Krona expected to edge stronger into year-end as Riksbank seen tighter

FXStreet cites Rabobank analysis saying markets already price about 30 bps of Riksbank hikes on a six month view, with VAT effects fading after next year.

Reported · Written up by our desk · Major Pairs

FXStreet highlights Rabobank’s view that Sweden and the Riksbank are in a relatively better position than many G10 peers to delay further rate hikes, supported by benign CPI and CPIF inflation despite supply disruption tied to the Iran war.

Rabobank’s senior FX strategist Jane Foley says the outlook is shifting as the impact of a VAT cut on food prices fades and growth data improves, which could increase pressure on the Riksbank to raise rates.

FXStreet notes that markets are already positioned for 30 bps of Riksbank tightening on a six month view, aligning with the Riksbank’s guidance that the probability of a rate increase later this year has risen versus the March assessment.

Against that backdrop, Foley expects EUR/SEK trading to range with a moderately firmer Swedish Krona into year-end.

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