On Monday, UBS adjusted its stance on the Swedish Krona (SEK), adopting a moderately bearish outlook following the Riksbank's recent decision to lower interest rates.
The bank has revised its forecast for the EURSEK exchange rate, now expecting it to reach 11.80 by the end of the second quarter, 11.90 by the end of 2024, and 11.60 by the end of 2025. The previous targets were set at 11.30, 11.10, and 10.75, respectively.
The change in UBS's outlook is attributed to several factors impacting the SEK. The bank anticipates that the SEK will be vulnerable to accelerating imported inflation. Additionally, the strength of the US dollar and policy divergence in comparison to the European Central Bank (ECB) are seen as contributing factors to the bearish perspective on the Swedish currency.
In contrast, UBS has maintained a more favorable view towards the Norwegian Krone (NOK). After reviewing the Norwegian budget revision, UBS considers the update to be mildly positive for the NOK. Consequently, the bank has kept its end-of-second-quarter target for the EURNOK exchange rate unchanged at 11.70.
UBS also suggests a strategy for investors interested in the NOK against the SEK. The bank advises buying NOKSEK on dips to 0.9850, with a target of 1.0260 and a stop loss at 0.9720. This recommendation is based on the bank's assessment of the Norwegian budget revision and its implications for the NOK.
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