SEK now looks to politics – Danske Bank

Senior Economist at Danske Bank Vladimir Miklashevsky noted the Swedish Krona could remain somewhat vulnerable to the inconclusive results from the latest elections.

Key Quotes

“In the SEK, the political risk premium that arose ahead of the election due to expectations of a messy parliamentary situation was confirmed by the election outcome. Hence, it would be premature to scale off that risk premium just yet”.

“On the other hand, any premia related to fears that the Sweden Democrats will become the biggest party and/or push an EU referendum should go away, in our view. Government formation will take time, probably weeks – a process that could weigh further on the SEK. Later this week, focus will shift to Swedish inflation data”.