Image: Reuters Berita 24 English - The Swedish central bank increased its benchmark interest rate by 50 basis points as anticipated on Thurs...
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| Image: Reuters |
Berita 24 English - The Swedish central bank increased its benchmark interest rate by 50 basis points as anticipated on Thursday, which helped the Swedish crown gain value against the euro.
While this was happening, safe-haven demand increased due to fresh concerns about rising interest rates and a worldwide recession. The euro flattened out against most of its peers, staying close to a new 2015-low vs the Swiss franc and at a two-week low against the US dollar.
After quickly rising by 0.4 percent to 10.6410 following Sweden's Riksbanken rate hike to 0.75 percent, the Swedish crown was up 0.1 percent against the euro at 0830 GMT.
The Riksbank signalled more aggressive hikes for the remainder of 2022, Jesper Petersen, an FX analyst at Danske Bank, said, "but, from 2023 and beyond the revised rate path was somewhat lower than we expected the Riksbank to present today."
The euro was expected to experience its worst quarter versus the dollar since the end of 2016, falling by 5.6 percent on a quarterly basis.
After losing 0.75 percent on the dollar on Wednesday, it was down 0.1 percent against the dollar for the day at $1.0434.
When compared to the safe-haven Swiss franc, it too fell to a new 7-1/2-year low, falling to 0.9964 francs, while still enjoying the benefits of the Swiss National Bank's unexpected rate hike two weeks ago.
In response to worries that the European Central Bank would be more cautious in its rate hike choices, Jane Foley, head of FX Strategy at Rabobank London, said that growing concerns about a recession in the euro zone connected to the energy risk had strengthened safe haven flows.
The euro could see new challenges as the "window of opportunity for ECB rate hikes could be short lived," she said.
In an effort to slow the pace of inflation, the ECB is anticipated to raise interest rates in July for the first time in ten years. However, experts disagree on the size of any increase due to the possibility that higher borrowing costs may worsen the economy.
The second-largest economy in the euro zone is now facing further challenges after French inflation reached a record high of 6.5 percent in June.
ECB President Christine Lagarde and U.S. Federal Reserve Chair Jerome Powell both made statements on the importance of bringing down inflation on Wednesday at the ECB's annual conference in Sintra, Portugal.
The dollar continued to lead other major currencies, with sterling hunkering down 0.2 percent at $1.2149, with losses this week setting it up for a monthly slide of 3.6 percent.
The discrepancy between a hawkish Fed and a dovish Bank of Japan continues to put a lot of pressure on the yen, which was last trading at 136.1 yen. The dollar also traded slightly below a new 24-year high of 137 Japanese yen hit on Wednesday.
Due to ongoing market turbulence and the U.S. Securities and Exchange's rejection of digital asset manager Grayscale's application to float a spot bitcoin exchange-traded fund, bitcoin fell once more below the symbolic $20,000 threshold.
