The Krona climbed to 8.5064 per Euro this morning after the Deputy Governor of the Swedish central bank announced his intention to resign.
The Swedish Krona Exchange Rate was in the region of 0.1176 against the Euro as of 12:10 am GMT
Deputy Governor Lars E.O. Svensson has been pushing for more severe interest rates cuts for some time. Although he argues that present policies are leading to increased levels of unemployment, he has so far failed to secure any backing, and it seems that after 6 years serving on the central bank’s board he may have had enough.
Svensson stated: ‘I haven’t managed to get support for a monetary policy that I consider would lead to better target fulfilment, with both higher inflation closer to the target of 2 per cent and lower unemployment.’
John Gernandt, Chairman of the General Council, responded to Svensson’s decision in the following way: ‘We would like to thank Lars E.O. Svensson on behalf of the General Council for the valuable work he has done during his time at the Riksbank. With his solid academic background he has provided an excellent contribution to developing the analysis work at the Riksbank and has successfully created interest in monetary policy issues both in Sweden and abroad.’
After Svensson asserted that he will be leaving the Riksbank next month, at the expiration of his term, the Krona gained on several of its most traded peers.
As economist Annika Winsth noted: ‘We saw immediately an effect on the Krona. [Svensson’s] belonged to the dovish camp and that means that there is a slightly bigger likelihood that [the Riksbank] will raise a little bit earlier than if he had remained. It’s healthy to have a person on the board that looks at things from a different angle and, in that sense, his way to work has been good. But it hasn’t been good for the Riksbank and its reputation both in Sweden and abroad that there’s been a tone that is clearly quite tough between board members.’
The SEK/EUR pairing is likely to undergo significant movement this week following the release of several pieces of volatile Eurozone data, including tomorrow’s German manufacturing PMI.
One Euro currently buys 8.5129 Swedish Krona.
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