The Swedish krona is among the major currencies that are susceptible to the latest developments in East Europe alongside the Euro, and both have been a basis for market sentiment surrounding the conflict on markets and economies.
On March 7, as the third round of peace talks capped off without any breakthroughs and as energy prices surged to a 14-year high, the SEK fell to its lowest in nearly two years at almost 10 SEK per USD.
USDSEK D1
Dovish Riksbank
The Swedish central bank’s (Riksbank) recent dovish stance also weighs on the SEK. At its February monetary policy meeting, Riksbank kept interest rates at 0% and maintained the volume of its asset purchases unchanged. The decision dealt a further blow to the SEK, knocking its value by 2% shortly after the rate decision.
However, the pressure is growing on Riksbank Governor Stefan Ingves to hike rates as the central bank acknowledged the rising inflation rate as a result of higher energy prices.
Central bank peer pressure
Still, the central bank …
