Swedish Krona Rises to Two-Month High Versus Dollar on Rate BetsNeal Armstrong
The Swedish krona rose to a two-month high against the dollar after government reports showed consumer confidence improved and unemployment declined, damping speculation the central bank will cut interest rates further.
Sweden’s currency strengthened versus all 16 of its major counterparts after a government research institute said the Riksbank will keep its benchmark interest rate at 1 percent this year as the economy improves. Investors should bet the krona will appreciate to the highest since April against the euro, according to Nordea Bank AB.
“These are very impressive numbers that are reducing the probability that the Riksbank will cut interest rates,” said Jonas Thulin, head of global alpha strategy at Nordea Bank in Stockholm. “The krona has strengthened today and we think that will continue.”
The krona advanced 0.6 percent to 6.3964 per dollar at 3:17 p.m. London time after appreciating to 6.3883, the strongest level since April 17. Sweden’s currency gained 0.7 percent to 8.5673 per euro after rising to 8.5543, the most since June 4.
Nordea earlier this month advised investors buy the krona versus the dollar and is about to publish a recommendation the currency will strengthen to 8.31 per euro, Thulin said.
A Swedish consumer confidence index, according to a new calculation, improved to 98.2 this month from 97.7 in May, the National Institute of Economic Research said. A gauge of manufacturing confidence climbed to 94.3 from 90.3. The unemployment rate fell to 8.2 percent in May from 8.7 percent the previous month, Statistics Sweden said.
The central bank won’t cut its main lending rate again this year as growth in the largest Nordic economy rebounds this year and next year, the Swedish National Institute of Economic Research said. The central bank has lowered its benchmark four times since December 2011.
The Riksbank will keep its benchmark rate at 1 percent in 2013, the institute forecast in a statement on its website. The economy will grow 1.5 percent this year and 2.5 percent in 2014, it predicted, raising estimates from March.
Sweden’s currency appreciated 0.5 percent to 1.1174 per Norwegian krone after advancing to 1.1156, the strongest level since May 8.
The krona has gained 9.1 percent in the past 12 months, the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro gained 5.4 percent and the dollar dropped 0.8 percent.