Nordic Currencies Gain After China Sheds Peg, Fueling Global Risk Appetite
Sweden’s krona rose to the strongest in 21 months against the euro after China signaled an end to the yuan’s peg to the U.S. dollar, boosting demand for currencies benefiting from the global recovery.
The krona also reached the strongest in more than a month versus the dollar on speculation Sweden’s exports will rise. Norway’s krone climbed as the price of crude oil, the nation’s biggest export, jumped to the highest since May.
“The Chinese announcement was a relief for investors,” said Carl Hammer, a currency strategist at SEB AB in Stockholm. “The Scandinavian currencies are being bundled with the Australian and Canadian dollars as those which will benefit the most from the China move.”
The krona rose 0.7 percent to 9.5070 at 11:53 a.m. in Stockholm after trading at 9.4841 earlier, the strongest since Sept. 9, 2008. The Swedish currency climbed 0.8 percent to 7.6672 per dollar and reached 7.6193, the strongest since May 14.
The krone rose 0.3 percent to 7.8551 per euro. A barrel of crude oil rose to as much as $78.87, the most since May 6.
Exports account for about half of Sweden’s $377 billion economy. The krona may gain to 9.3 per euro in three months as Swedish policymakers will probably raise their key interest rate a quarter-point to 0.5 percent on July 1, Hammer said. Rates will be at 1.25 percent and the krona at 9 per euro by year-end, he said.