29 Apr 2015
Riksbank will remain vigilant on EUR/SEK – Rabobank
FXStreet (Edinburgh) - Jane Foley, Senior Currency Strategist at Rabobank, believes that EUR/SEK in levels close to 9.000 could prompt some action by the Swedish central bank.
Key Quotes
“This morning’s decision by the Riksbank not to cut interest rates was clearly a disappointment for the market”.
“The presentation of the accompanying statement however, suggests that the Riksbank considered carefully how to limit the damage from this blow”.
“Not only did the Riksbank open its statement with the announcement of a SEK 40-50 bln expansion in asset purchases but it also reported a significant lowering in the repo-rate path which “reflects the fact that it is possible to cut the repo rate further”.
“On the back of the drop in EUR/SEK this morning Governor Ingves has actively engaged in damage limitation by countering speculation that a floor in rates has been reached”.
“That said, the Riksbank is unlikely to be too concerned about this morning’s move lower in EUR/SEK just yet. The series of pre-emptive policy moves since last July was successful in lending support to EUR/SEK which is holding well above the 2012 low and comfortably above its 5 year average”.
“However, a dip towards the EUR/SEK 9.00 level would likely raise the risk of further policy action from the central bank”.
Key Quotes
“This morning’s decision by the Riksbank not to cut interest rates was clearly a disappointment for the market”.
“The presentation of the accompanying statement however, suggests that the Riksbank considered carefully how to limit the damage from this blow”.
“Not only did the Riksbank open its statement with the announcement of a SEK 40-50 bln expansion in asset purchases but it also reported a significant lowering in the repo-rate path which “reflects the fact that it is possible to cut the repo rate further”.
“On the back of the drop in EUR/SEK this morning Governor Ingves has actively engaged in damage limitation by countering speculation that a floor in rates has been reached”.
“That said, the Riksbank is unlikely to be too concerned about this morning’s move lower in EUR/SEK just yet. The series of pre-emptive policy moves since last July was successful in lending support to EUR/SEK which is holding well above the 2012 low and comfortably above its 5 year average”.
“However, a dip towards the EUR/SEK 9.00 level would likely raise the risk of further policy action from the central bank”.