Swedish Krona At 1-year Low Versus U.S. Dollar After Riksbank's Rate Cut
July 03 2014 - 4:10AM
RTTF2
The Swedish Krona tumbled against the U.S. dollar in European
morning deals on Thursday after Sweden's Central bank lowered the
key repo rate by half a percentage point to combat deflation.
The Executive Board of the Riksbank cut the repo rate by 0.5
percentage points to 0.25 percent from 0.75 percent, effective July
9. The bank was forecast to slash the rate by 25 basis points.
The repo-rate path is revised downward substantially. Increases
in the repo rate are not expected to begin until the end of 2015
and it is expected to be just over 2 percent at the end of
2017.
Policymakers assessed that the repo rate and the repo-rate path
need to be even lower for inflation to rise towards the target. The
low repo rate will contribute to higher demand in the economy as a
whole, which will lead to inflation rising.
The Krona depreciated to 6.8759 against the dollar, its lowest
since July 2013, and down by 2.6 percent from Wednesday's closing
quote of 6.7045. The next possible downside target for the krona
lies around the 6.90 level.
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