The Swedish crown plunged 0.5 percent against the euro after Riksbank said it will cut interest rates soon, as the market awaits local inflation figures this Thursday. The crown fell past 9 crowns a euro to trade at 9.0027.
“This message from the Riksbank has changed the picture and the euro will probably extend upward from here,” an unnamed head of foreign exchange with a Scandinavian bank told Reuters. “Inflation tomorrow is the key now. It seems unlikely that we’ll get a strong number – the data set implies that inflation will be fairly weak. I think around 9.03 would be first resistance for more gains for the euro.”
Despite the expanding economy, Swedish inflation remains very low, giving central bank officials a lot of headache. This also comes at a time when household borrowing is very high and the crown has fallen 2 percent since mid-March.
“If we continue to see more bad economic news out of Sweden then of course it’s hard to say,” another dealer told Reuters. “But I think the Riksbank has given us room to push the euro another five to seven figures higher depending on inflation tomorrow.”
The euro also held steady against most currencies, which analysts attributed to China’s move to rebalance its forex reserves after it purchased billions of dollars in March in order to weaken the renminbi.
The currency remained slightly unchanged against the dollar at $1.3800. The dollar fell by at least 1 yen to trade at 101.55 yen on Tuesday, before recovering on Wednesday to 102.04 yen. The euro also rose 0.2 percent to trade at 140.77 yen.
To contact the reporter of this story; Yashu Gola at firstname.lastname@example.org