EUR/SEK: The krona to weaken in the weeks ahead – Rabobank

The Riksbank may not have ruled out another period of negatives rates, but for sure policymakers would have been hoping that deflationary pressures would not return so soon, per Rabobank. 

Key quotes

“Sweden experienced deflation in April with the headline CPI inflation rate dropping 0.4% y/y.” 

“We see risk of the SEK weakening modestly vs. the EUR back towards EUR/SEK 10.70 on a 1 to 3-month view.

“It is clear that negative interest rates are no panacea.  That said, it is not clear if the Riksbank’s association with them is over and this is likely to keep the SEK on the back foot in the weeks ahead.”