EUR/SEK: Riksbank’s back in hawkish mode, but for how long?
We had signalled the Riksbank needed to rebuild a hawkish tone to re-establish confidence in SEK and avert more severe sell-offs. In June, the RB offered a solid package to support the krona: a 25bp hike, pledge of another one (likely in September) and an acceleration in quantitative tightening.
EUR/SEK followed the dollar lower lately, but had stayed around all-time highs for some time after the RB meeting, a signal that: a) domestic tail risks remain relevant; b) there are concerns those risks may pose a threat to the sustainability of further tightening.
SEK is undervalued in the medium term and there is still room to recover, but remains the G10 currency with the greatest exposure to real estate pains and domestic risks in general
