Against the euro, the crown jumps to a 6-week and two week-high against the United States dollar. Riksbank is leaving rates unchanged at 0%. Against major currencies ahead of Federal Reserve and European Central Bank, the dollar fell 0.5%. The oil price drop is weighing on market sentiments.
The Central Bank held its interest rates steady. Moreover, it maintained stimulus measures designed to support an economy battered by the coronavirus pandemic. Thus, on Tuesday, the Swedish crown jumped up against the euro and the dollar.
Against the United States dollar, the crown rose 1.2% to 9.911, a two-week high. Against the euro, the crown rose to 10.7905, its highest since mid-March.
Nonetheless, Sweden is facing its worst downturn since World War Two. Investors were watching closely for any sign that Riksbank will push rates back below zero after it became the first central bank to ditch a negative interest rate policy late last year.
Nevertheless, as expected, the Riksbank left its benchmark rate at 0%. Moreover, its governor says that a rate cut will not solve the economic problems of Sweden.
Dollar and Others
It has been argued that it is better to focus on credit supply. Moreover, it is better to counteract a rise in rates of interest to companies and households. This is unlike what the majority of central banks do across the world during the pandemic of coronavirus.
Morten Lund is an FX strategist at Nordea. He said that it is not hard seeing this as a bit hawkish. You would think that in the case they did not cut rates now, then when they would cut? He added that he expected rates are remaining steady this year and the next.
Investors turned their attention to policy meetings by the United States Federal Reserve and European Central Bank later this week. Thus, the Swedish currency was the primary mover for Tuesday.
Moreover, having been earlier subdued by a fresh fall in oil prices, appetite for riskier currencies picked up through morning trading.
- Trading Instrument