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5 May 2016
Riksbank minutes suggest room for gradual EUR/SEK depreciation – Nomura
Research Team at Nomura, draws two key conclusions from the minutes of the Riksbank’s April meeting.
Key Quotes
“First, three of the six board members expressed some concern about the QE expansion, suggesting less appetite for further easing going forward. Second, Governor Ingves and First Deputy Governor Jochnick both highlighted that a weaker krona cannot be relied on going forward to contribute to inflationary pressures.
Although this outlook is not new, the fact that it was highlighted by two of the more dovish members of the Executive Board may suggest slightly more tolerance of SEK appreciation going forward (though we think rapid SEK appreciation would still be opposed by the Riksbank).
With this in mind, we still think gradual EUR/SEK depreciation is likely. We have been targeting 9.15 by end- June, but further depreciation to the 9.05-10 level looks possible in Q2. The current level of EUR/SEK above 9.25 is attractive for an EUR/SEK short bias.”
Key Quotes
“First, three of the six board members expressed some concern about the QE expansion, suggesting less appetite for further easing going forward. Second, Governor Ingves and First Deputy Governor Jochnick both highlighted that a weaker krona cannot be relied on going forward to contribute to inflationary pressures.
Although this outlook is not new, the fact that it was highlighted by two of the more dovish members of the Executive Board may suggest slightly more tolerance of SEK appreciation going forward (though we think rapid SEK appreciation would still be opposed by the Riksbank).
With this in mind, we still think gradual EUR/SEK depreciation is likely. We have been targeting 9.15 by end- June, but further depreciation to the 9.05-10 level looks possible in Q2. The current level of EUR/SEK above 9.25 is attractive for an EUR/SEK short bias.”