The Riksbank is expected to maintain its policy rate at 1.75% for the third consecutive meeting. This interest rate is likely to stay at this level for a while, according to a report from Brown Brothers Harriman.

USD/SEK Exchange Rate Overview

The USD/SEK exchange rate is approaching a four-year low, finding a new support level near 8.9000. This indicates stability in Sweden’s economic policy, despite currency changes. FXStreet’s Insights Team gathers expert market observations for readers, offering commercial perspectives along with insights from both internal and external analysts. Other financial news includes a 5.3% increase in US durable goods orders for November and gold prices rising above $5,000 for the first time. These insights help market participants stay informed about larger economic trends. Legal disclaimers highlight that this content is meant for informational purposes only and should not be seen as an investment recommendation. Readers are encouraged to conduct their own research before making financial decisions. All provided information is non-binding, with no liability for mistakes or omissions.

Riksbank Policy Overview

The Riksbank plans to keep its policy rate at 1.75% for the third time in a row. Inflation pressure has eased significantly through 2025, with the last recorded rate being 2.1%. This allows the central bank to maintain its current stance. This stability suggests that further rate hikes are unlikely, resulting in a predictable but low yield for the Krona. The main factor affecting the USD/SEK exchange rate is not the strength of the Krona, but rather the notable weakness of the US Dollar. This trend began when the Federal Reserve started lowering rates late last year. With the Fed cutting rates twice in the last quarter of 2025 to support a slowing economy, the interest rate advantage of holding dollars has decreased. This shift continues to drive the pair lower toward the critical 8.9000 support level. For derivative traders, the steady Riksbank and a declining dollar indicate lower expected volatility for the Swedish Krona. Implied volatility on one-month SEK options has dropped from over 10% in mid-2025 to about 7.5% this month, making options more affordable. This environment favors strategies that benefit from a steady decline rather than sudden, unpredictable movements. The most likely direction for the USD/SEK is continued decline, as the market anticipates at least two more Fed rate cuts by summer. Traders may want to buy USD/SEK put options to capitalize on this clear downward trend while maintaining defined risk. A drop below the 8.9000 support could lead to a faster decline, with 8.7500 as the next target. Create your live VT Markets account and start trading now.

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