FXStreet (Edinburgh) – Senior FX Strategist Paul Robson at RBS sees the Swedish krona coming under pressure in the medium term.
Key Quotes
“Last week’s 10bp rate cut and significant extension of asset purchases were not expected by markets”.
“Riksbank also appears to have stepped up its rhetoric on the exchange rate”.
“There was clearly a fear that doing nothing could invite SEK appreciation, particularly amid heightened risks around Greece”.
“While there is scope for further repo rate cuts, extending government bond purchases again may be difficult given market size”.
“This may be an issue given an apparent reluctance to buy covered bonds due to concerns around the housing market”.
“FX intervention now appears more likely should the SEK begin to appreciate more sharply. However, verbal intervention looks most likely for now”.
(Market News Provided by FXstreet)