12 Feb 2015
NOK/SEK might see additional gains near-term – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, comments on the recent Riksbank decision to cut its interest rates to negative and make its monetary policy more expansionary, and further share that NOK/SEK has scope to see additional gains near-term.
Key Quotes
“While we had suspected that a small rate cut would be announced this morning, the central bank went much further in announcing that monetary policy will be made even “more expansionary by purchasing government bonds”.”
“The Riksbank has announced that it will make purchases of nominal government bonds with maturities from 1 year to around 5 year for a sum of SEK 10 bln and interest rates in the front of the curve have dropped accordingly this morning.”
“The Riksbank reports that recent developments in inflation have been roughly as expected but cite concerns that low oil prices increase the risk that inflation expectations could be impacted.”
“The Riksbank also state that today’s policy move is a reaction to “increased uncertainty about developments abroad and on the financial markets”.“
“We see this as a reference to the sharp drop in the value of the EUR in recent months and the reactions taken by the ECB, SNB and the DNB in pushing their interest rates below zero.“
“By cutting interest rates more aggressively than expected in recent months, the Riksbank has managed to ensure a soft tone for the SEK vs. both the USD and the EUR.”
“NOK/SEK has been trending higher since the middle of December, however, it remains well below its September high around 1.1348 and we see scope for additional gains near-term.“
Key Quotes
“While we had suspected that a small rate cut would be announced this morning, the central bank went much further in announcing that monetary policy will be made even “more expansionary by purchasing government bonds”.”
“The Riksbank has announced that it will make purchases of nominal government bonds with maturities from 1 year to around 5 year for a sum of SEK 10 bln and interest rates in the front of the curve have dropped accordingly this morning.”
“The Riksbank reports that recent developments in inflation have been roughly as expected but cite concerns that low oil prices increase the risk that inflation expectations could be impacted.”
“The Riksbank also state that today’s policy move is a reaction to “increased uncertainty about developments abroad and on the financial markets”.“
“We see this as a reference to the sharp drop in the value of the EUR in recent months and the reactions taken by the ECB, SNB and the DNB in pushing their interest rates below zero.“
“By cutting interest rates more aggressively than expected in recent months, the Riksbank has managed to ensure a soft tone for the SEK vs. both the USD and the EUR.”
“NOK/SEK has been trending higher since the middle of December, however, it remains well below its September high around 1.1348 and we see scope for additional gains near-term.“