Riksbank’s call for currency strength jolted markets
The krona will continue to be “everyone’s favourite short” for as long as Sweden continues to be saddled with massive private debt, low savings, a volatile housing market and a weaker economy, said Gareth Gettinby, investment manager at Aegon Asset Management UK Plc.
The worst housing-market crash and the fastest inflation since the 1990s turned the Nordic nation into an early victim of the global tightening cycle — with the currency hitting an almost 14-year low versus the euro before Thursday.
The Riksbank said that a stronger krona was “desirable,” while its new governor Erik Thedeen fired a warning shot to “those who speculate against” the currency. That marked a departure from previous communication, with the bank having faced criticism for being too sanguine on the currency’s weakening.
This has pushed the krona to its highest level since late December
“The fundamentals for Sweden are just so poor.”
Bloomberg 11 february 2023
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