Sweden Seen Losing Krona Benefits in Deflation Fight: Currencies

Sweden is poised to lose the benefits of a weaker krona to dig itself out of the deepest deflationary hole in the developed world.

While the currency has fallen 4 percent this year against a basket of nine major-market peers tracked by Bloomberg Correlation-Weighted Indexes, the most in the group, strategists are increasingly optimistic that the losses will reverse as the European Central Bank considers extending stimulus measures. That would weigh on the euro and, by extension, support the krona even if Sweden’s Riksbank cuts interest rates.