EUR/SEK: Clear de-escalation of Ukraine conflict required for krona to build on recent gains – MUFG

Ukraine conflict optimism and Riksbank repricing has triggered strong SEK rebound. A clear de-escalation of the Russia-Ukraine war will be required for the Swedish krona to extend its advance in the coming weeks and remain at stronger levels, economists at MUFG Bank report.

Hawkish shift in Riksbank policy providing tailwind for SEK

“The increasing likelihood of the Riksbank significantly bringing forward plans for tighter policy is providing a favourable tailwind for SEK performance in the run up to the next policy meeting on 28th April.”

“A clear de-escalation of the Ukraine conflict will be required for the SEK to extend its advance in the coming weeks and remain at stronger levels. Otherwise it runs the risk of correcting lower again should the Ukraine conflict prove more prolonged.”