EUR/SEK

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Turbulent times for EUR/SEK

On Thursday last week, Swedish Riksbank has further decreased the main policy rate into more negative territory of -0.35%. Furthermore, Riksbank members announced to buy roughly additional 4.8 billion USD of government bonds. The central bankers hope to counter deflationary dangers as well as decreasing consumer prices. The main drivers for these – rather unexpected – measures were the growing economic uncertainty as well as the increasing worries about Greece. Still, some economists are concerned about the negative effects of these low interest rates. They often mentioned the increasing house prices and rising household debt. Consequently, they also refer to the comparable economic situation in neighboring countries like Norway and Denmark. According to a Financial Times article the rate cut took markets by surprise, with most economists having forecast no change due to the strength of recent economic data.

However, the negative outcome of the Greece referendum linked to the continuation of the austerity policy and indirectly the further existence of Greece in the Euro-Zone didn’t jeopardize the common currency, yet. However, many market participants further expect volatile market movements in the upcoming days and weeks.