In the view of economists at ING, the Swedish Krona may struggle to enter a sustained uptrend next year given its elevated exposure to the eurozone’s growth story.

Eurozone exposure a drag on SEK

“We see some room for EURSEK to move lower throughout the year – also considering that we estimate the pair to be around 9.0% overvalued. However, the high risk of a prolonged energy crisis in the eurozone means that SEK is significantly less attractive than other pro-cyclical currencies next year.”

“Incidentally, SEK is highly correlated to the US tech stock market, which looks particularly vulnerable at the moment.”

“A return to 10.00 or below would likely require a significant improvement in European sentiment.”