The krona strengthened its position against the euro after the unexpected Riksbank’s rate decision

The Swedish krona strengthened against the euro after the Riksbank's unexpected decision in September to lower its key rate to 1.75%. Such a move came as a surprise to the market and was explained by weak economic data and the previous growth of the krona, which accelerated the decline in the EUR/SEK exchange rate.

Despite the difficulties in the Swedish economy, including a weak labor market and tariff pressures, fiscal incentives and a favorable global environment provide support for the national currency. These factors offset the effect of the rate cut and contribute to the stability of the crown.

Analysts at UBS Bank predict that the EUR/SEK exchange rate will fall below 11.0 and remain under pressure at least until 2026 amid an improving global economy and a reduction in global risks.

The bank has opened a short position on the EUR/SEK pair, which indicates its confidence in the continued strengthening of the krona against the euro in the coming months.