Abandoning previous plans for continuous interest rate hikes through 2011, the Swedish Riksbank now appears to be expected to slash rates at least twice in 2012. Citing weakened global growth and poor recoveries in Europe and the United States, officials at Nordea Bank AB claim that Swedish exports will simply be too far diminished to warrant the previously anticipated rate hikes.
Expected this Friday, the Riksbank is due to announce its latest decision on interest rates, but with little optimism emerging from its southerly neighbors, and with exports to the euro zone plummeting from 7.8% to 4.1%, the forecast 25 base point hike may get delayed.
The impact this is having on the Swedish krona (SEK) is still getting priced in, but traders are beginning to see some depreciatory ticks favoring a return to safety by investors. The International Monetary Fund ( IMF ) noted that the global economy is entering a "dangerous new phase" which could see the global recovery pushed off track by a European debt crisis run amok and persistent unemployment and stagnation in the US.
This is impacting the Scandinavian countries, which saw solid growth over the past two years, and may end up pulling the regional kroner (SEK, NOK, and DKK) off their current bullish channels and into downward trends. Friday's rate announcement by the Riksbank, therefore, may be more important for speculators than previously assumed.
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