What’s Broken in Scandies?
In an environment where markets appear to be seeking daily for the next victim of funding stress and balance of payments problems, it seems incomprehensible to many how the currency of a country with a 12.75% current account surplus is one of the worst performing currencies this year. Respite continues to elude the Norwegian krone, while its neighbour the SEK is not faring well either. Although Sweden’s balance of payments is not as extraordinary, 5.9% of GDP would be the envy of most other countries as well. The list of other positive traits is long, so the adverse performance likely points to exogenous or technical factors. The two currencies are far from broken but the market does come close. On a macro level, structural evolution in external economies is also outweighing domestic forces.
Read the full report: UBS