Swedish Krona Drops to Decade Low as Risk-Off Meets Growth Woes

(Bloomberg) -- Sweden’s krona declined to a decade low against the euro amid renewed anxiety about a global trade war and as the latest data fueled concern a slowdown in the Scandinavian economy is deepening.

The Swedish currency extended the worst year-to-date performance among Group-of-10 currencies as investors spurned riskier assets after U.S. President Donald Trump threatened to increase tariffs on Chinese goods. The latest reading for a gauge of Sweden’s business activity came in at the lowest level since 2016, according to figures released Monday.

Swedish Krona Drops to Decade Low as Risk-Off Meets Growth Woes

The krona’s declines accelerated in April as the Riksbank signaled it was in no hurry to lift rates from levels below zero and also extended its bond-purchase program. Policy makers have seemed unperturbed by the exchange-rate slide, with Governor Stefan Ingves saying last week that the central bank has an inflation target and not a currency one, adding that the krona’s effect on prices in the long run is limited.

“Trade-war noise risks further punishing the krona in the very short term,” said Roberto Cobo Garcia, the head of G-10 currency strategy at Grupo BBVA. “However, unless there is a total confrontation between China and the U.S. and a significant spike in global risk aversion, current valuations and technical levels alongside the oversold set-up also suggest” limited room for declines in the Swedish currency, he said.

The Swedish currency declined 0.4 percent to 10.7321 per euro, the weakest level since July 2009. It has tumbled more than 5 percent against the common currency this year and almost 8 percent versus the dollar, and touched the lowest level since 2002 against the greenback last week.

©2019 Bloomberg L.P.