Aug. 30 (Bloomberg) -- Sweden’s krona weakened against all its major counterparts on speculation slowing economic growth will deter the central bank from raising interest rates.
The currency also depreciated for a third day against the euro as a slide in Swedish stocks sapped demand for the nation’s currency. The government last week slashed its 2011 growth forecast to 4.1 percent from 4.6 percent, and cut the prediction for next year to 1.3 percent from 3.8 percent. The Riksbank will announce its next interest-rate decision on Sept. 7.
“The strong economic outlook in Sweden is apparently faltering,” said Arne Lohmann Rasmussen, chief foreign-exchange analyst at Danske Bank A/S in Copenhagen. “That is weighing on the krona. There are fears that the Riksbank will take the same view as the government and revise their outlook.”
The krona depreciated 0.5 percent to 9.1829 per euro as of 4:05 p.m. in London, the first three-day losing streak since June 15. It fell 1.1 percent to 6.3629 per dollar.
Pension funds may be selling Sweden’s currency after the decline in equities, Rasmussen said. This provides investors with an “excellent buying opportunity,” he said.
Sweden’s benchmark stock index, the OMX Stockholm 30 Index, fell 0.4 percent, having declined 13 percent this month.
The Norwegian krone weakened 0.3 percent to 5.3657 per dollar, and was little changed at 7.7492 per euro.
Norway’s central bank Governor Oeystein Olsen said he was monitoring the krone after investors bought the currency as a haven from the worldwide stock-market rout, triggering gains that threaten exports.
“We have noticed that there has been no major weakening of the krone in the last period,” Olsen said today in an interview in Oslo. “It has remained relatively strong in the last phase of turbulence in international markets. We follow the developments and its implications on price prospects and on the real economy.”
--With assistance from Josiane Kremer in Oslo. Editors: Nicholas Reynolds, Mark McCord
To contact the reporter on this story: Paul Dobson in London at email@example.com
To contact the editor responsible for this story: Keith Campbell at firstname.lastname@example.org