Swedish Krona: Growth and Future Rate Outlook Favor SEK — Société Générale

In the latest analysis from Société Générale FX strategist Kit Juckes, the Swedish krona stands to benefit from the country's relatively stronger economic growth outlook and market expectations that the Riksbank will tighten monetary policy in the future. Despite the krona's previous weakness, fundamental support is building.

**Growth and Policy Divergence Provide Support**

Juckes believes Sweden's strong growth and low-inflation environment contrast sharply with broader G10 dynamics. This divergence in economic performance, coupled with the Riksbank's potential rate-hike path, provides fundamental support for the krona. He also notes that on a real effective exchange rate basis, the krona is currently undervalued, enhancing its appeal.

**Valuation Near Multi-Year Lows**

According to Société Générale's observations, while the Swedish krona is about 6% above its 2023 low on a real effective exchange rate basis, its real value has depreciated by roughly 18% cumulatively over the past two decades. This suggests room for correction from a long-term valuation perspective. At the time of writing, USD/SEK is trading near 9.87403, with the market closely watching upcoming economic data for further guidance on central bank policy expectations.

**Outlook Depends on Policy Implementation Pace**

Despite the favorable growth and rate outlook, the krona's actual trajectory will still depend on the pace of Riksbank policy implementation and shifts in global risk sentiment. Should the central bank signal more explicit tightening, a valuation-repair rally in the krona could materialize.