Riksbanken rate hike lifts Swedish crown

The Swedish crown rose on Thursday against the euro after Sweden’s central bank hiked its benchmark interest rate by 50 basis points as expected.

In the meantime, the euro flattened against most peers, remaining close to a fresh 2015-low versus the Swiss franc and near a two-week low against the US dollar, amid safe-haven demand on renewed worries about higher rates and a global recession.

The Swedish crown was up 0.1 per cent against the euro at 10.6810 at 0830 GMT after briefly jumping 0.4 per cent against the euro to 10.6410 following Sweden’s Riksbanken rate hike to 0.75 per cent.

Jesper Petersen, FX analyst at Danske Bank said the kneejerk reaction on SEK-crosses would likely fade as the Riksbank signalled more aggressive hikes during rest of 2022 “however, from 2023 and beyond the new rate path was somewhat lower than we expected the Riksbank to present today”.

The common currency was set for its worst quarter against the dollar since the end of 2016, on track for a 5.6 per cent quarterly decline.

It was 0.1 per cent lower on the day versus the dollar at $1.0434, after losing 0.75 per cent on the dollar on Wednesday.

It also dropped to a fresh 7-1/2-year low versus the safe-haven Swiss franc at 0.9964 francs, with still basking in the afterglow of the Swiss National Bank’s surprise rate hike two weeks ago.