EUR/SEK downside capped by Riksbank – Rabobank

By FXStreet FXStreet (Edinburgh) – Jane Foley, Senior Currency Strategist at Rabobank, sees the downside in the cross limited by the possibility of FX intervention by the Riksbank.

Key Quotes

“The Riksbank recently announced that the Governor together with the First Deputy Governor will now be able to take the decision to instantly intervene in the currency market if it deems it necessary”.

“Ordinarily a central bank may be expected to announce a rate cut and thus weaken the value of the currency. However, the Riksbank’s repo rate is already well below zero at -0.35% and the very low interest rate environment is fueling household debt which is enhancing the vulnerabilities of the economy”.

“Speculation that the Riksbank could intervene around EUR/SEK 9.00-9.10 is likely to lend support at least in the short term. However, on an extended bout of EUR weakness the Riksbank will have to show the colour of its money to maintain credibility”.
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Source:: FX Street