Friday, 2 September 2011

Swedish Krona Falls as Manufacturing Declines

The Swedish krona fell in the report showed that manufacturing contracted in Sweden last month, reinforcing the view that the central bank could cut interest rates.

The manufacturing index fell to 48.7 from 50.1 in August Swedbank in July, while the average forecast was 49.8. A reading below 50.0 indicates decreased. That was the first decline in two years.

The adverse report agree that the Swedish economy is too week to support the current level of borrowing costs, let alone to survive further adjustment. According to Credit Suisse rates the central bank cut interest rates in the next 12 months.

USD/SEK jumped from 6.3377 to 6.4127. The currency pair has recovered somewhat today, trading at about 6.3936 as of 1:45 GMT.

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