Swedish Krona Advances as Economic Strength Saps Rate Bets
Sweden’s krona strengthened against both the euro and dollar after better-than-estimated unemployment data and a rise in consumer confidence sapped speculation about an interest rate cut in September.
The krona climbed as much as 0.53 percent against the euro and traded 0.3 percent higher at 8.4434 as of 12:20 p.m. in Stockholm. It gained 0.4 percent versus the dollar to 6.9369.
Sweden’s consumer confidence index rose to 5.6 from 3.1 the previous month, the Stockholm-based National Institute of Economic Research said today. Unemployment gained to 8.8 percent in June from 8.1 percent a month earlier, lower than an estimate of 8.9 percent according to a Bloomberg survey of 10 economists.
“This strengthens the view that the Riksbank will stay on hold in September,” Torbjoern Isaksson, an economist at Nordea Bank AB (NDA), said by phone from Stockholm. “So far the Swedish economy has been surprisingly resilient.”
The country’s central bank earlier this month kept its benchmark interest rate unchanged and signaled it may cut rates by the end of the year. Swedish growth is slowing this year as Europe’s deepening debt crisis weighs on trade for the export- dependent economy.
Other reports also released today showed the country’s trade balance improved as exports rose 2 percent in June, while consumer borrowing growth slowed to 4.5 percent from 4.6 percent in May.
While exports have been “sluggish” and the manufacturing industry is facing difficulties, “incomes are rising and Swedish households are keeping up their spirits,” said Isaksson. Nordea estimates the Riksbank will cut rates in October and again in December as the labor market deteriorates in the second half, he said.
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