On Monday, UBS revised its stance on the Swedish Krona (SEK), adopting a moderately bearish outlook following the Riksbank's recent decision to cut interest 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. Previous targets were set at 11.30, 11.10, 11.10, 11.10 and 11. 11.30, 11.10, 11.30, 11.10, 11.10, 11.90 and 10.75 respectively.
The change in UBS's forecast is due to several factors affecting the Swedish krona. The bank expects the Swedish krona to be vulnerable to the acceleration of imported inflation. In addition, the strength of the US dollar and policy divergence compared to the European Central Bank (ECB) are seen as contributing factors to the bearish outlook for the Swedish currency.
In contrast, UBS maintained a more positive view of the Norwegian Krone (NOK). After reviewing the Norwegian budget review, UBS considers the update to be moderately positive for the Norwegian krone. As a result, the bank kept its target for the end of the second quarter for the exchange rate unchanged at 11.70.
UBS also suggests a strategy for investors interested in the Norwegian krone versus the Swedish krona. The bank advises buying on dips 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 review and its implications for the Norwegian krone.
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