The Swedish Krona fell sharply against the euro in European deals on Tuesday, as Sweden's central bank cut repo rate to zero percent.

The Executive Board of the Riksbank lowered its key rate by a quarter point to zero from 0.25 percent. Members assessed that the monetary policy needs to be even more expansionary for inflation to rise towards the target of 2 percent.

The low repo rate increases demand in the economy, which contributes to higher inflationary pressures.

The bank, meanwhile, assessed that it is appropriate to slowly begin raising the repo rate in the middle of 2016. It would reach 1.75 percent towards the end of 2017.

The krona slipped to 9.3480 against the euro, its lowest since July 3, when it hit a 3-1/2-year low. The next possible downside target for the krona lies around the 9.5 zone. The pair closed yesterday's deals at 9.2644.

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