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Global Central Bank Policies for Week Ended September 4

PART:
1 2 3 4
Part 2
Global Central Bank Policies for Week Ended September 4 PART 2 OF 4

Swedish Krona Rises as the Riksbank Holds Rates

The Riksbank holds rate at -0.35%

The Riksbank, Sweden’s central bank, met market expectations on September 3, 2015, as it kept rates steady at a record low of -0.35%. The Riksbank gave a positive statement, as it suggested that economic activity in the country is garnering strength and inflation is showing a positive trend.

The central bank’s asset purchase program that started this year was also left unaltered. A note of caution was added toward the end of the statement, suggesting that in case inflation prospects deteriorate, the central bank is more than prepared to expand the monetary policy even more.

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Swedish krona posts steady gains against the euro

The less dovish tone of the Riksbank meant that the Swedish krona gained for the day, especially against the euro. The euro to the krona pair (EUR-SEK) fell more than 1% over the day. As you can see in the above graph, there was a sudden tumbling in the currency pair when the central bank statement came out. The positive sentiment in the krona continued for the day and was seen trading close to 9.36 levels toward the end of the day on September 3, 2015.

Impact on the market

The iShares MSCI Sweden ETF (EWD), the Swedish fund that trades on the New York Stock Exchange, was seen taking a positive bias from the strong statement by the Swedish bank and gained 1.20% on September 3. The WisdomTree Europe Hedged Equity ETF (HEDJ) showed lesser gains and ended the day 0.74% higher.

The Swedish ADR (American Depositary Receipt) Telefonaktiebolaget L M Ericsson B (ERIC) also posted gains, ending the day 1.97% higher. Other European ADRs were also on a positive bias, but the gains were less compared to their Swedish counterparts such as Deutsche Bank (DB) and Alcatel-Lucent SA (ALU), which rose 0.90% and 1.22%, respectively.

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