Swedish Krona plunged on currency market against the Pound as Riksbank meeting minutes were more dovish than the initial statement. The GBP/SEK exchange rate closed up on Tuesday, settling at 12.4369 and before the London opening session, the GBP/SEK rate was seen quoted around yesterday’s closing price.
The dovish minute’s rhetoric has set the tone for the Swedish Krona. Among Riksbank policymaker, several dissents oppose an interest rate hike in December from -0.25% up to 0.00%. The division among policymakers was due to the opacity in the economic and inflation outlook. Not a single member from the Sweden central bank board sees the case for a prolonged hiking cycle after the December hike.
Riksbank Governor Stefan Ingves implies that it’s premature to abandon negative interest policy when no major central bank that adopted this unconventional monetary policy tool was able to emerge out of it. The minutes showed that zero interest policy is likely to be on hold for several years with no intention for further hikes.
Yesterday data from the manufacturing sector painted a dark perspective over the Swedish economy. Swedish Industrial Production and Orders missed market expectation. Sweden September Industry production came in at 0.9% versus 2.1% prior reading while the September Industrial Orders came in at -0.2% versus -1.6% prior reading. The annualized rate also showed a lackluster growth missing the consensus and only showing a 1.4% growth versus 2.8% prior reading.
Another bad news for the Swedish economy was the October composite PMI, which showed contraction in the manufacturing sector showing a reading of 48.6, the lowest reading seen in the last six years.
