Battle of currency; Swedish Krona drops against Euro

On Wednesday, the distance between the Swedish krona against the euro widens. This happened after the interest rate of the country’s central bank was cut. The announcement about the bond-buying program didn’t help.

The euro gained about 1% against the krona in the minutes after the announcement, hitting a high of over 9.34 kronor.

“We are all breathless here,” said Aurelia Augulyte, a currencies analyst at Nordea in Copenhagen.

In its announcement, the central bank said that the key interest rate will remain at -0.25% at least until the second half of 2016. It also said it would buy bonds worth 30 billion kronor with maturities of up to 25 years.

“The Riksbank promised they could do more between meetings if needed, and clearly they have been disappointed. It is a pretty desperate situation,” said Ms. Augulyte.

Further action from the central bank remains possible, BNP Paribas analyst Colin Bermingham said. “All eyes are on the krona.”

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