On Monday, UBS adjusted its position on the Swedish krona (SEK), adopting a mildly bearish outlook following the Riksbank’s recent decision to cut interest rates.
The bank revised its exchange rate forecast, expecting it to reach 11.80 by the end of the second quarter, 11.90 by the end of 2024 and 11.60 by the end of 2025. Previous targets were set at 11.30, 11.10, and 10.75, respectively.
The change in UBS’s forecast is explained by several factors affecting the Swedish krona. The bank expects the Swedish krona to be vulnerable to an acceleration in imported inflation. Additionally, the strength of the US dollar and policy divergences compared to the European Central Bank (ECB) are seen as factors contributing to the bearish sentiment on the Swedish currency.
UBS, on the contrary, maintained a more favorable attitude towards the Norwegian krone (NOK). Having reviewed Norway’s budget revision, UBS considers the update to be moderately positive for the Norwegian krone. Consequently, the bank maintained its exchange rate target at the end of the second quarter at 11.70.
UBS also offers a strategy for investors interested in the Norwegian krone versus the Swedish krona. The bank advises buying if it falls to 0.9850 with a target of 1.0260 and a stop loss at 0.9720. This recommendation is based on the bank’s assessment of the Norwegian budget revision and its implications for the Norwegian krone.
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