Nordea’s Henrik Unell maintains a constructive outlook on the Swedish Krona (SEK), emphasizing that growth prospects and equity flows are more significant than concerns over carry trades. Following a war-driven spike in EUR/SEK and USD/SEK, improved investor sentiment, a steady policy stance from the Riksbank, and ongoing rotation from US to Swedish assets by households are cited as key factors underpinning expectations for a recovery in SEK fundamentals [1].
Unell notes that the main narrative and forecast for SEK remain unchanged, as the war situation has 'hopefully plateaued.' With investor sentiment now recovered, Nordea expects macroeconomic fundamentals to follow suit [1]. The Riksbank is anticipated to keep rates on hold for the remainder of the year unless there is a significant escalation in geopolitical tensions [1].
Additionally, the Riksbank’s decision not to act preemptively or raise alarms over rising gasoline prices is seen as a positive for Swedish households. Nordea believes that the lack of yield support for SEK is less important than growth, and equity flow data shows that households continue to shift investments from US to Swedish assets [1].
CONCLUSION
Nordea’s analysis suggests that the Swedish Krona is likely to benefit from improved growth prospects and positive equity flows, outweighing concerns about carry trades. The Riksbank’s steady policy and household investment trends are expected to support SEK fundamentals in the near term.