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Strong change for the Swedish Krona

The Swedish currency continues to weaken.

The Swedish Krona is still having a hard time and was losing ground on Tuesday against both the Euro and the Dollar.

The krona has not been as weak against the euro as it is now since November, and this could mean problems for the Riksbank.

Many now expect interest rates to be cut in May.

“Not Installed”

Sweden's inflation rate has calmed down after a long period of high inflation.

However, the weak krona is something that influences the Riksbank's decision to cut interest rates, reports Dagens industri.

– Next week's rate cut is not cemented at all, says Carl Hammer from SEB to Di.

It keeps falling

One euro currently costs 11.76 Swedish krona, which is comparable to the end of 2023 when it will cost exactly 11 Swedish krona.

The dollar costs just under 11 Swedish krona, which is much higher than at the end of 2023 when it cost just under 10 Swedish krona.

A reduction is expected

Now in May, the Riksbank is expected to announce the interest rate cut that households and businesses have been waiting for.

However, it has been confirmed that the development of the crown has some influence on how people think.

– It seems that we are witnessing a division between high growth and inflation in the United States and weak development and low inflation in Europe, says the Governor of the Swedish Central Bank, Erik Thedén.

-Stronger growth in the United States could lead to higher inflationary pressures there and globally, which could also affect inflation in Sweden. It is possible that rising interest rates in the rest of the world will also affect the krona.

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It is crucial

However, the most important thing for the Riksbank is for inflation to stabilize at low levels.

– Inflationary pressures and inflation potential here in Sweden are what determine our monetary policy. We indicated in March that it might be possible to cut the interest rate in May or June, continues Theden.

– But we also said that it depends on inflation expectations continuing to look good. Before making our next interest rate decision in two weeks, we need to clearly analyze what lower inflation means for the long-term inflation trend, and weigh the risks that exist that inflation could rise again.

Image: Riksbank

Text: Editors