Sept. 1 (Bloomberg) -- Sweden’s krona weakened against the dollar after a report showed manufacturing shrank for the first time in two years, reducing demand for the nation’s assets.
The Swedish currency fell for this fourth time in five days against Norway’s krone. Swedbank AB’s manufacturing index, based on responses from about 200 purchasing managers, slid to 48.7 in August from 50.1 the prior month. Analysts forecast 49.8, according to a Bloomberg survey. A reading above 50 signals expansion. A Credit Suisse index predicts the central bank will cut interest rates over the next 12 months.
“The Swedish number was below expectations,” said Richard Falkenhall, a currency strategist at SEB AB in Stockholm. “We should see the krona weaken. We expect the Riksbank to stay on hold at the next meeting. The interesting thing will be to watch the rate path. They have to revise it lower.”
The krona depreciated 0.7 percent to 6.3883 per dollar at 4:06 p.m. in London. It dropped 0.1 percent against the Norwegian krone to 1.1837.
Traders are betting the Riksbank will lower interest rates by 34 basis points over the next year, according to a Credit Suisse index based on swaps. A month ago the index was predicting an increase of 26 basis points.
The central bank, which raised its benchmark repurchase rate by a quarter of a percentage point to 2 percent on July 5, next meets to review policy on Sept. 7.
The Riksbank started providing interest rate forecasts in 2007, guiding the market with average estimates of the benchmark repo rate in coming quarters.
--Editors: Keith Campbell, Nicholas Reynolds
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