Danske Bank sticks to euro–krona outlook despite inflation crosscurrents
Danske Bank has kept its forecast for the euro to Swedish krona (EUR/SEK) exchange rate unchanged at 11.00 over a 6‑ to 12‑month horizon, even as the pair trades just below that level near 10.8. The Norwegian krone to Swedish krona (NOK/SEK) has moved back above 0.98, while the euro to Danish krone (EUR/DKK) remains close to 7.47.
Stable SEK outlook over 6–12 months
The Danish bank said it sees no reason to adjust its projections for the Swedish krona, citing stable underlying fundamentals. Its baseline view is that SEK will remain broadly steady in the coming months, with only limited scope for short‑term shifts in policy or broader market sentiment.
This relatively subdued currency view implies a narrow trading band for EUR/SEK near term, with no major catalyst currently in sight for a decisive move.
Riksbank sees energy shock as manageable
Riksbank Deputy Governor Martin Jansson has suggested that recent inflation dynamics do not warrant an aggressive policy shift.
He noted that:
- cuts in food‑related value‑added tax are pushing inflation lower
- rising energy prices are providing upward pressure, but mainly via the supply side
He argued that this type of supply‑side shock can largely be “looked through,” stressing that today’s environment differs from 2022. In his view, inflation is now lower, demand is weaker, and the krona is stronger than during the earlier inflation spike.
April 16 speech: lower risk of inflation spillovers
In an April 16 speech, Jansson reiterated that the central bank must remain alert to inflation risks stemming from geopolitical tensions. However, he underlined that the risk of spillover effects into broader prices is now lower than before.
That stance points to a high bar for any policy response to the latest energy‑driven price increases and signals a preference for continuity at the Riksbank rather than a rapid turn toward tighter policy.
Mixed inflation signals in Sweden
Recent data show a divergence between headline and underlying inflation:
- Sweden’s annual headline inflation rate rose to 0.6% in March, a five‑month high
- the increase was driven largely by a 16.3% jump in fuel prices
- the Riksbank’s preferred measure, the consumer price index with a fixed interest rate (CPIF), eased slightly to 1.6% in March, below the 2% target
For currency markets, the combination of softer underlying inflation and cautious central bank communication suggests limited pressure for a more hawkish stance.
Implications for currency markets
For traders, the Riksbank’s message and Danske Bank’s forecasts both point toward:
- a low likelihood of a near‑term pivot to significantly tighter monetary policy
- a relatively stable Swedish krona, with EUR/SEK expected to gravitate toward 11.00 over the next 6–12 months
- a market environment where external price shocks are partly offset by weaker domestic demand and a firmer currency
This framework argues against expecting sharp swings in SEK unless there is a fresh macro or geopolitical surprise.
Nordic cross rates: NOK and DKK views unchanged
Danske Bank has also kept its expectations for the euro to Norwegian krone (EUR/NOK) unchanged, retaining a mildly upward trajectory on both a six‑ and twelve‑month view.
At the same time, EUR/DKK continues to hover very close to 7.473, one of the higher levels of the past year. That stability reflects Denmark’s long‑standing and predictable exchange rate framework, which keeps the krone tightly aligned with the euro.
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