Krona losses in May were overdone and have already been partially corrected. A tighter stance by the Riksbank should be able to give SEK some upward momentum in the short term. But since the ECB will probably also carry out the first interest rate hikes in July, further upside potential is limited, economists at Commerzbank report.

Only next year should SEK be able to appreciate further

“The Riksbank could become even more restrictive and raise the interest rate path at its meeting at the end of June due to the inflation trend, which is why SEK could still gain some ground against the euro. However, its upside potential is limited, as the ECB is also likely to start raising interest rates in July.”

“Only next year, when the ECB will soon end its interest rate cycle again, whereas the Riksbank will continue to make gradual interest rate hikes in line with its forecast, should SEK be able to appreciate further.”