Monday, December 27, 2010

Swedish Krona Vs. Danish Krone

A reader wondered what I thought of the outlook of the Swedish krona vs. the Danish krone.

Well, since the Danish krone is pegged to the euro, and will likely remain so, and since I think the Swedish krona will continue to appreciate against the euro, it follows that I believe it will also appreciate against the Danish krone.

The Swedish krona is at historically high levels against the euro (and therefore also against the Danish krone), something which limits the upside potential, but since ECB rate hikes are out of the question as long as the debt panic persists and since the Riksbank looks set to hike rates a few times during 2011 (despite the objections of "arch-dove" Lars E.O. Svensson), the krona will likely appreciate against the euro and the Danish krone.