Swedish Krona Feels The Heat From Russia Concerns, Risk Exodus

(Bloomberg) --

Sweden’s krona may be in for more pain after yesterday’s slide with the currency buffeted by concerns about the Russia-Ukraine standoff spilling into the Baltic region and faltering sentiment as stock markets decline.

While it bounced back today, the krona plunged to an 18-month low against the greenback yesterday as it followed U.S. equities markets south with the prospect of higher U.S. borrowing costs fraying investors’ nerves.

Meanwhile, Sweden’s IPO market looks likely to cool down after seeing record volumes last year, while the Riksbank’s dovish stance also weighs on the krona. The market may see 40 billion kronor ($3.8 billion) worth of adverse flows this spring as foreign investors repatriate dividends from Swedish firms.

Technical factors may also have fueled yesterday’s dive for the currency. A surge in the euro-krona cross above 10.40 was a level that triggered buying activity from market-making desks that needed to hedge their options exposure.

• Some information comes from FX traders familiar with the transactions who asked not to be identified because they aren’t authorized to speak publicly

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