In recent weeks, the Swedish krona has suffered strongly from the increased risk aversion in the wake of the Ukraine conflict. Once the war events subside, the SEK should be able to correct the losses. However, as long as the Riksbank maintains its ultra-expansionary stance, the krona will not be able to make any additional gains until 2023, economists at Commerzbank report.

Bringing up the rear thanks to risk aversion and Riksbank

“If the Ukraine conflict subsides, the krona could at least recover the losses associated with risk aversion. But it is likely to have a hard time against the euro this year, as the ECB is expected to raise the key interest rate in the fall.”

“The krona could appreciate again only well into next year when the Riksbank is likely to slowly make its monetary policy somewhat less expansionary.”