April 26, 2018 / 7:59 AM / a month ago

Swedish crown slides after cbank signals slow exit from easy policy

LONDON, April 26 (Reuters) - The Swedish crown reaffirmed its status as one of the weakest currencies in 2018 after the central bank said on Thursday that interest rates will rise towards the end of the year, later than a previous forecast, sending the currency lower.

The crown fell 0.7 percent versus the U.S. dollar to 8.616 and 0.6 percent versus the euro to 10.475 after having traded up against both before the Riskbank decision.

Before the outcome of the policy decision, where the central bank held interest rates at a negative 0.5 percent as widely expected, the crown had traded higher on expectations the Riksbank might signal a quicker exit from its very accommodative monetary policy.

But policymakers said monetary policy needed to proceed cautiously as inflation remained low, pulling the crown down.

So far this year, the crown has lost around 5 percent against the dollar and more than 6 percent against the euro as investors have been disappointed that Sweden may not follow in the footsteps of other central banks in normalising monetary policy.

The Riksbank’s main policy rate stands at a minus half a percentage point, more deeply negative than the ECB’s at minus 40 basis points and Japan’s at minus 10 basis points. Only Switzerland, at minus 75 basis points, is more negative. (Reporting by Saikat Chatterjee Editing by Tommy Wilkes)

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