Feb. 21 (Bloomberg) -- Sweden’s krona extended losses for a fifth day after a report showed consumer confidence unexpectedly declined this month, boosting speculation the central bank will need to deliver another interest rate cut.
The krona fell as much as 0.53 percent against the euro to 9.0106, the lowest level since Dec. 26. It slid as much as 0.6 percent versus the dollar to 6.5746. It was the second-biggest loser against the dollar and the euro of major currencies tracked by Bloomberg.
An index measuring consumer confidence slid to 100.3 in February, the lowest since September, the National Institute of Economic Research said in a monthly report today. The index was seen rising to 104 in a Bloomberg survey of economists. The manufacturing confidence index fell more than estimated to 103.8, compared with a predicted 107.1. That was down from a revised 107.7 in January.
The data adds pressure on the Riksbank to cut rates again after a report earlier this week also showed consumer prices declined more than estimated. Stefan Ingves, the governor of Sweden’s central bank, last week pledged to prioritize fighting inflation after keeping the benchmark rate at 0.75 percent and saying policy won’t be tightened until early 2015.
“There will be another cut and given the inflation figures that just came out it’s not impossible that it will come already in April or July,” said Par Magnusson, chief economist at Royal Bank of Scotland Plc in Stockholm.
The Riksbank in December turned from predicting higher rates to easing policy for the first time in a year as concern over deflation outweighed worries over a house price driven credit bubble. Meanwhile, Finance Minister Anders Borg yesterday said he won’t use fiscal policy to stimulate the economy as he seeks to return government finances to surpluses after predicting the biggest shortfall since 1996 this year.
“While growth most probably will be moderate in the fourth quarter 2013 as exports remained weak, we anticipate a pickup in the coming quarters,” Anna Raman, senior economist at Nykredit Bank A/S in Copenhagen, said in a note. “However, by historical standards, the economic upturn will probably be moderate due to the uneven and hesitant global recovery and the fact that the krona this time is less of a shock absorber than it usually has been in periods with sluggish global demand.”
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