SOCGEN strategist Kit Juckes says the Swedish krona appears undervalued after
recent declines as persistently low rates weigh on the currency. On a real
effective exchange rate basis the krona is about 6% above its 2023 low but
roughly 18% weaker versus its 20-year average. June CPIF (CPI with fixed
interest rate) fell to 1.3%, a reading that does not support Riksbank
tightening, while May economic growth accelerated to 3.9%. Juckes says Sweden’s
relative outperformance versus the euro area could attract capital inflows and
eventually feed through to inflation.
