UBS raises EURSEK targets, citing Riksbank cuts and inflation

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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 revised its exchange rate forecast and now expects it to reach 11.80 at the end of the second quarter, 11.90 at the end of 2024, and 11.60 at the end of 2025. Previous targets were set at 11.30, 11.10, and 10.75, respectively.

The change in UBS’s outlook is attributed to several factors affecting SEK. The bank predicts that the SEK will be susceptible to acceleration of imported inflation. Additionally, the strength of the US dollar and the policy divergence from the European Central Bank (ECB) are seen as contributing factors to the bearish outlook for the Swedish currency.

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In turn, UBS maintained a more favorable attitude towards the Norwegian krone (NOK). After reviewing the Norwegian budget revision, UBS considers this update to be moderately positive for SAI. Therefore, the bank kept its target exchange rate unchanged at 11.70 at the end of the second quarter.

UBS also suggests a strategy for investors interested in NOK versus SEK. The bank recommends buying on declines to 0.9850, with a target of 1.0260 and a stop-loss of 0.9720. This recommendation is based on the bank’s assessment of the Norwegian budget revision and its implications for the SAI.

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