Riksbank Steady on Swedish Krona Despite Weak Performance

Sweden's Riksbank appears to be comfortable with its current policy stance, according to BNY's Wee Khoon Chong. Despite inflation staying below target levels, the bank has not shown any signs of aggressive action to support the Swedish Krona (SEK).

The Riksbank is not alone in this approach, as it is also among the most 'at ease' with its current policy path, along with the Swiss National Bank.

Chong notes that the favorable real-rate dynamics and low inflation rates have not translated into strong SEK performance due to valuation concerns and a high KIX level.

The KIX, which measures Sweden's import-weighted exchange rate index, remains at the upper end of its recent range. This would normally prompt the Riksbank to state that the currency is undervalued, but Chong expects it to avoid such action as long as CPI remains anchored.