On Monday, UBS adjusted its stance on the Swedish krona (SEK) and adopted a moderately bearish outlook following the Riksbank’s recent decision to cut rates.
The bank has revised its forecast for the exchange rate and now expects it to reach 11.80 by the end of the second quarter, 11.90 by the end of 2024 and 11.60 by the end of 2025. The previous targets were set at 11.30, 11.10, and 10.75 respectively.
The change in UBS’s outlook is attributed to several factors affecting SEK. The bank expects the SEK to be vulnerable to accelerating imported inflation. Furthermore, the strength of the US dollar and policy differences vis-à-vis the European Central Bank (ECB) are seen as contributing factors to the bearish outlook on the Swedish currency.
In contrast, UBS has maintained a more favorable stance on the Norwegian krone (NOK). After assessing the Norwegian budget revision, UBS views the update as slightly positive for the NOK. As a result, the bank has kept its target for the end of the second quarter for the exchange rate unchanged at 11.70.
UBS also proposes a strategy for investors interested in the NOK versus the SEK. The bank recommends buying on dips up to 0.9850, with a target of 1.0260 and a stop loss at 0.9720. This recommendation is based on the bank’s assessment of the Norwegian budget revision and its impact on the NOK.
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