EURNOK poll data
OSLO, July 2 (Reuters) - The Swedish and Norwegian
currencies will continue to make gradual gains against the euro
and dollar during the next 12 months, propelled higher by the
ongoing economic recovery from the coronavirus pandemic, a
Reuters poll of analysts showed.
Vaccination against COVID-19 is accelerating in the Nordic
region while international trade is rebounding, resulting in
rapid economic growth for Sweden and Norway and lending support
to their currencies.
Having plunged in March last year during the first wave of
infections, the Swedish crown quickly regained lost ground and
now trades around 5% stronger against the euro than its
pre-pandemic level and 12% stronger against the U.S. dollar.
Economists polled by Reuters expected the Swedish currency
to make an additional gain of around 2% against the euro and 5%
against the dollar by mid-2022.
The Swedish Riksbank on Thursday kept its key policy rate on
hold at 0.0% and also maintained its asset purchase plan, as was
widely expected among analysts.
"By conducting an expansionary monetary policy, the Riksbank
contributes to continued good development of the economy and to
inflation attaining the target more permanently," the central
bank's executive board said.
Norway's oil industry has been boosted by a rebound in crude
prices and the central bank has pencilled in a rate hike for
September, placing it at the forefront of developed economies in
raising post-pandemic borrowing costs.
Norges Bank last year slashed rates to a record low 0% and
intervened in the currency market to prop up the crown but now
forecasts four hikes in the coming 12 months as it seeks to
normalise monetary conditions.
The Norwegian currency, which weakened sharply last year,
has returned to the same level against the euro as seen before
lockdowns began 16 months ago. Against the dollar it is around
8% stronger than before the virus outbreak.
In the coming 12 months, the Norwegian crown will likely
rise by some 4% against the euro and 7% against the dollar, the
analysts on average predicted.
CHANGE OF GOVERNMENTS
The Swedish Social Democrat-led government resigned this
week after losing a confidence vote, giving right-of-centre
parties a chance to gain power.
However, the outcome is far from certain and the
re-appointment of caretaker Prime Minister Stefan Lofven remains
an option, as does a snap election.
Norway is meanwhile preparing for national elections in
September in which Conservative Prime Minister Erna Solberg's
centre-right coalition is widely expected to lose to the
It remains uncertain which Norwegian political parties would
join in a Labour-led government.
By this time next year, Sweden's crown was predicted to
strengthen to 9.90 to the euro from 10.14 now, the median
Meanwhile, the Norwegian crown was seen trading at 9.80 to
the euro one year from now, against around 10.20 at present.
(For other stories from the latest Reuters foreign exchange
(Reporting by Terje Solsvik in Oslo; polling by Sujith Pai and
Swathi Nair in Bengaluru; Editing by Steve Orlofsky)