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Swedish Krona Falls on Weak Economic Data

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Swedish krona declines on disappointing data releases

The US dollar–Swedish krona pair increased by 0.65% on September 28, 2015, as the trade deficit widened in August. This occurred amid a decrease in exports compared to an increase in imports. The sentiment was subdued by the sluggish August retail sales data.

The Swedish krona underperformed against its other European peers like the euro and the pound sterling, falling against those currencies by 1.07% and 0.46%, respectively. Earlier this month, the Swedish central bank, the Riksbank, met market expectations by keeping interest rates at a record low of -0.35% in order to lift economic activity and provide an upthrust to inflation.

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Trade balance, retail sales release on a sluggish note

The trade balance for August came in at a deficit of 3.6 billion Swedish krona against July’s deficit of 0.3 billion Swedish krona, depicting the consecutive deficit in trade.

On the other hand, August’s retail sales grew at a slow pace of 1% on an annual basis against 6.1% growth in July. On a monthly basis, retail sales declined by 1.7% in August against a 0.2% increase in July.

Impact on the market

The iShares MSCI Sweden ETF (EWD), which trades on the New York Stock Exchange, traded on a negative bias following these economic releases and lost 2.37% on September 28, 2015. The WisdomTree Europe Hedged Equity ETF (HEDJ) also traded on a lower note and ended the day recording a decline of 2.03%.

The Swedish ADR (American depository receipt) Telefonaktiebolaget L M Ericsson B (ERIC) also posted losses, ending the day 2.41% lower. Other Scandinavian ADRs were also on a negative bias. Petroleum company Statoil ASA (STO) was trading lower by 3.42% while fisheries major Marine Harvest (MHG) fell by 2.34%.

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