Swedish Crown, Bond Yields Fall After Riksbank Expands QE

The Swedish crown and 10-year government bond yields dropped to two-month lows on Wednesday after Sweden’s central bank expanded its asset purchase program and vowed to intervene in the currency market if an upturn in inflation is threatened.

The Riksbank held its benchmark repo rate unchanged at -0.35 percent, as expected, and said it would expand its bond buying program by 65 billion Swedish crowns ($7.65 billion) to a total of 200 billion crowns.

The crown fell to 9.4360 per euro, down 0.4 percent on the day, before recovering to trade at 9.3950, broadly unchanged on the day.

The dollar rose to around 8.5434 crowns, up 0.2 percent on the day.

Swedish 10-year bond yields fell to a two-month low of 0.51 percent, down 13 basis points on the day, from 0.59 percent before the decision.

Swedish blue-chip stocks turned higher after the decision, before steadying to trade up 0.6 percent, roughly where they had been.

A large majority of analysts in a Reuters poll had forecast the central bank would keep its record low repo rate unchanged after consumer prices rose in September for the first time in four months.

The Riksbank has cut rates three times this year to boost prices, most recently in July when the central bank also expanded its bond buying scheme to 135 billion Swedish crowns.


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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.