Sweden's Krona Climbs Against Most Peers on Faster Inflation

  • CPI in January climbs 0.8% versus 0.5% economists' estimate
  • Krona strengthens versus single currency by most since 2015

The krona strengthened against most of its 16 major counterparts after Sweden’s inflation accelerated faster than economists expected.

The currency gained the most since September versus the euro as consumer prices rose an annual 0.8 percent in January, according to a statement by Statistics Sweden. That beat the 0.5 percent increase predicted by a Bloomberg survey of analysts.

“They are obsessed with deflationary risks, and the latest CPI data was the key for today’s price action,” said John Hardy, head of foreign-exchange strategy at Saxo Bank A/S in Hellerup, Denmark. “We are seeing it stronger because inflation is not showing gathering deflationary clouds.”

The Riksbank lowered its repo rate to minus 0.5 percent last week amid global turmoil and expectations of more stimulus from other central banks. The bank has made it clear that it remains prepared to cut rates further, expand its quantitative-easing program or intervene in the currency market. Governor Stefan Ingves said Tuesday that he expects inflation to stabilize around the 2 percent target at the end of this year or early next year.

The krona appreciated 0.7 percent to 9.4132 per euro as of 12:31 p.m. in London. It strengthened 0.4 percent to 8.4849 per dollar.

Riksbank Deputy Governor Per Jansson said that the krona’s strengthening must not be too quick and that currency intervention was still possible. He added that he sees room for more stimulus and more rate cuts, while speaking Thursday to reporters in Oerebro.

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