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That the Swedish Krona is over valued?
Thursday, 12 July 2012
The krona is very strong and trading against the euro, the currency
recorded its highest number since 2000. This has been blamed on the
Swedish central bank, the Riksbank's relatively tight monetary policy,
a decent development on the stock market and higher interest rate
differences between Sweden and the euro area.
That what the Nordea thinks in a write - up in its market letter on Thursday.
The krona's strength depends on the fact that Swedish economy is quite
resilient despite problems in the euro area and that the Riksbank is
reluctant to stimulate the economy when the rest of the world central
banks are competing in weakening their currencies through what could be
called quantitative easing and various forms of stimulus, writes the
From a "fair value "perspective, however, Nordea feels that the Swedish krona is overvalued.
In terms of the Riksbank's TCW forecast on currency, the currency has
appreciated further. The rapid pace of the gain may be a problem for
companies that need time to adjust to new prices and exchange rates.
This can bring more focus on the krona in future interest rate
debate if the development continues.
This has made Nordea to the response to the development by revising up
its forecasts for the krona against the euro for the entire forecast
period extending to the end of 2013.
The Bank expects that the krona will depreciate slightly in the future
because they expect a weaker cyclical picture, which will lead to lower
interest rate spreads and weaker Swedish order books for exporting
By Scancomark.se Team
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