LONDON (Reuters) - The Swedish crown slid to its lowest level against the euro since late 2009 on Thursday after the central bank postponed plans for tightening monetary policy because of sluggish inflation.
After earlier trading higher, the crown fell 0.6 percent on the news to a low of 10.485, its weakest since Dec. 24 2009.
The Swedish currency is one of the worst performing among the G10 currencies this year because of expectations the Riksbank will stick to a highly accommodative monetary easing policy even as other central banks like the European Central Bank move towards ending extraordinary stimulus.
“A run of disappointing core inflation figures has prompted the policy committee to shift the expected date for its first rate hike from Q3 to Q4. The new rates forecast is perhaps a little more dovish than anticipated, showing less than a full hike by December,” ING economist Jonas Goltermann said.
The crown also fell 0.7 percent versus the dollar to 8.616 crowns, its lowest since mid-2017, before recovering slightly.
Before the outcome of the policy decision, where the central bank held interest rates at a negative 0.5 percent as widely expected, the crown had traded higher on expectations the Riksbank might signal a quicker change to policy.
But policymakers said they needed to proceed cautiously as inflation remained low.
So far this year, the crown has lost around 5 percent against the dollar and more than 6 percent against the euro.
The Riksbank’s main policy rate stands at a minus half a percentage point, more deeply negative than the ECB’s at minus 40 basis points and Japan’s at minus 10 basis points. Only Switzerland, at minus 75 basis points, is more negative.
Reporting by Saikat Chatterjee and Tommy Wilkes; Editing by Toby Chopra