Forex

Swedish crown jumps after central bank keeps rates unchanged

Reuters LONDON | Updated on April 28, 2020 Published on April 28, 2020

File Photo   -  Reuters

The Swedish crown climbed to a six-week high against the euro after its central bank held interest rates steady.

The Riksbank held its benchmark rate unchanged at 0 per cent, as expected, making no major changes to the package of measures it has launched to cushion the blow from the coronavirus outbreak on the economy, but said it was ready to do more if needed.

The crown rose as much as 0.5 per cent against the euro to 10.7815, its highest since mid-March. Against the dollar it jumped 0.7 per cent to a two-week high, and was last trading at 9.9565.

Unlike the majority of central banks around the world, the Riksbank has held its benchmark rate unchanged, arguing that it is better to focus on credit supply and to counteract a rise in interest rates to households and companies.

The Swedish currency, the major mover, held steady on Tuesday as investors bided time ahead of policy meetings by the US Federal Reserve and European Central Bank later this week, with a fresh fall in oil prices also subduing riskier bets.

The greenback was a tad softer against a basket of currencies at 99.970 - around where it has been parked for the last month. It was weaker against the yen at 107.055 yen per dollar and flat against the euro at $1.08697.

A 5 per cent drop in benchmark Brent crude and a 20 per cent drop in US crude offered ill omens for global demand.

Markets are looking for any forward guidance from the Fed, which meets later on Tuesday and is due to issue a statement on Wednesday. The European Central Bank meets on Thursday.

The Fed has led the global monetary policy response to the coronavirus pandemic by cutting interest rates to zero and aggressively buying bonds and corporate credit - a programme it extended overnight to include municipal debt of smaller US cities.

Analysts said it was unlikely that the Fed would make further major policy moves, given the scope and depth of recent action to counter the economic damage caused by Covid-19.

“The major central banks are at comparatively expansionary levels. All of them have beefed up asset purchases as much as they could. All of them are close to or even at the minimum lower interest rate bound,” wrote Thu Lan Nguyen, an analyst at Commerzbank.

“They are likely to remain there for the foreseeable future, which would point towards relatively stable exchange rates.”

The ECB has had less room to manoeuvre on rates and announced an enormous bond-buying programme. Still, bickering and indecision over a eurozone rescue package has some in the market expecting deeper action still, perhaps as soon as Thursday.

That has seen the euro left behind as expectations for an economic recovery from the pandemic has pressured the US dollar and driven a rally in riskier currencies such as the Australian dollar.

Still, the fresh fall in oil put the brakes on the charging Aussie, which had climbed more than 1 per cent earlier and has recovered nearly a fifth from a 17-year low struck last month.

Elsewhere the pound gained 0.3 per cent to $1.2456, having earlier been pressured after Prime Minister Boris Johnson warned it was too dangerous to relax a strict lockdown in Britain.

 

Published on April 28, 2020

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Sincerely,

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.