Sweden's Krona Climbs as Riksbank Leaves Policy Rates Unchanged

  • Central bank upgrades growth forecasts for 2016, 2017
  • Nordea says easing `done' while UniCredit sees more next year

The krona strengthened against all except two of its 16 major counterparts after Sweden’s central bank refrained from adding additional stimulus, citing an economy that’s growing faster than its own predictions and signs of a pickup in inflation.

The Swedish currency gained the most in more than a week against the euro after the decision, which came after the European Central Bank extended its own monetary easing measures earlier this month. Sweden’s economy has been “somewhat stronger than expected” and there’s been “an upward trend in inflation since last year,” the Riksbank said in a statement. The central bank held its key interest rate at a record-low minus 0.35 percent and raised its forecasts for economic growth next year and 2017.

While Riksbank Governor Stefan Ingves said that the institution can still do “all sorts of things” to create more money if needed to lift inflation, officials are probably done easing, said Annika Winsth, Stockholm-based chief economist at Nordea Bank AB.

The extension of the ECB’s bond-buying program to at least March 2017 will put strengthening pressure on the krona and the Riksbank will announce another plan of asset purchases, probably in April, Chiara Silvestre, an economist at UniCredit SpA in Milan, wrote in a note.

The krona strengthened 0.4 percent to 9.2891 per euro as of 1:12 p.m. London, the biggest gain since Dec. 4. Sweden’s currency appreciated for a third day versus the dollar, gaining 0.4 percent to 8.4513.

“It’s an expected market reaction on the back of a probably slightly less-dovish-than expected Riksbank,” said Thomas Harr, an analyst at Danske Bank A/S in Copenhagen. “They don’t seem too concerned about the currency, which is obviously something the market is focused on.”

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