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USD/SEK forecast: Swedish krona under pressure after bleak Riksbank outlook for economy

By Nicole Willing

Edited by Valerie Medleva

15:07, 14 November 2022

Swedish krona and US dollar banknotes
The Swedish krona has lost nearly 13% year-to-date against the US dollar. Where to next? – Photo: Lisa-S /

A lower-than-expected US inflation figure for October sent equity markets higher and lifted other currencies against the US dollar (USD) last week, giving some relief to the Swedish krona (SEK) after an extended decline to a record low.

The SEK has shed around 12.5% against the US dollar since the start of 2022, having moved up from a 20% decline in the first half of October.

USD/SEK Exchange Rate Live Chart

Will the krona be able to recover more ground, or will it reverse course and fall further against the dollar?

In this article, we look at the main drivers for the USD/SEK currency pair and the latest analyst forecasts.

What factors influence USD/SEK?

Foreign exchange (forex) markets trade currencies in pairs with a base currency and a quote currency. The USD/SEK pair refers to how many Swedish krona – the quote currency – are needed to buy one US dollar – the base currency.

The Swedish krona is the official currency of Sweden. It’s issued by the country’s central bank, the Sveriges Riksbank. Established in 1668, the Riksbank is one of the world’s oldest banks and the oldest central bank.

The Riksbank has floated the SEK against other currencies since 1992 and occasionally intervenes in the forex market to stabilise its value. The exchange rate is strongly influenced by Sweden’s monetary policy, and is highly correlated with the Danish krone (DKK) and the Norwegian krone (NOK). Although they are European Union (EU) members, Sweden, Denmark and Norway have so far held off on joining the eurozone.

While Sweden is a relatively small economy, many multinational companies have operations in the country, thanks to its highly educated workforce. The krona has been viewed as a safe haven currency in Europe. But looser monetary policy and global uncertainty has seen the krona lose value in recent years. 

USD/SEK 5-year chart

The SEK has become highly sensitive to international economic sentiment, while the US dollar – the global reserve currency – has rallied in the past year as a safe haven from macroeconomic and geopolitical instability. 

The value of the dollar is affected by global economic sentiment as well as US economic activity. In 2022, the USD has been driven primarily by the US Federal Reserve’s policy on rapidly raising interest rates to try to bring down high inflation, which has lifted the Dollar Index (DXY) to 20-year highs.

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US Dollar Index (DXY) Live Chart

USD/SEK retreats from record high

The USD/SEK pair climbed from around 6.50 to 9.95 in April 2020, when the US dollar rallied at the start of global Covid-19 lockdowns. The exchange rate pulled back to around 8.30 at the end of 2020, but as the dollar strengthened and the krona came under pressure, the pair moved up to start 2022 at 9.11.

The USD/SEK rate spiked to the 10 level on 7 March as the dollar climbed in response to the Russian invasion of Ukraine. While the pair slipped back to 9.25 at the end of March, it moved back above 10 in May and has since remained above that level, reaching an all-time high of 11.36 on 11 October.

The pair has retreated from the high in the past month, trading down to 11.39 on 11 November, as US inflation data for October showed that the rise in consumer prices slowed to 7.7%, which was lower than the 8% economists had predicted and its lowest level since January. That weighed on the US dollar, as it raised expectations that the Federal Reserve could begin to slow the pace of interest rate hikes.

The Riksbank has hiked interest rates this year in response to high inflation and to limit the interest rate differential between Sweden and the US, raising its key policy rate from 0% to 0.25% in May, to 0.75% in July and by a higher-than-expected 100 basis points to 1.75% in September.

Sweden’s headline inflation rate – the Consumer Price Index (CPI) was at a three-decade high 10.8% in September – driven by higher prices for electricity, food and non-alcoholic beverages. Its Consumer Price Index with fixed interest rate (CPIF), the Riksbank’s target variable, was 9.7% in September, up from 9% in August, according to Statistics Sweden. October’s figures are due to be announced on 15 November.


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Sweden's new government, which was elected in September, presented its first budget on 8 November that included cuts to fuel taxes and increased welfare spending as it aims to ease the impact of the economic slowdown without fuelling inflation further.

Analysis by Spanish bank Santander noted that the krona “performed a little better against its other G10 currency peers in October, but is still the second-worst performer year-to-date, lagging just the JPY. 

“The Riksbank has become increasingly vocal about the weak SEK, with Governor Ingves saying the Bank ‘cannot wait with hikes given the falling krona’, and Deputy Governor Jansson suggesting ‘a weak exchange rate is not welcome currently’.”

Analyst Michael Flisher added: “Following the Riksbank’s 100bp rate hike in late September, the inflation outlook is central to how large a rate hike is likely to come in late November at Governor Ingves’ final meeting after leading the world’s oldest central bank for 17 years… A 75bp hike looks most likely at this stage, but Ingves could go out with another 100bp bang if inflation rises again in October as the next meeting is not until February.”

What is a realistic US dollar to Swedish Krona forecast in the current inflationary environment?

USD/SEK forecast: Will the SEK find support or shed further value?

The Riksbank stated in its monetary policy report in September that the value of the krona has become undervalued because of global uncertainty: “The summer has been characterised by high volatility on the financial markets and increasingly tight monetary policy abroad. In such environments, the krona tends to depreciate. The real exchange rate is now assessed to be weaker than might be expected considering, among other things, general economic development in Sweden in relation to other countries. In trade-weighted nominal terms, the krona is expected to appreciate slowly over the coming years.”

“With the SEK traditionally one of the most sensitive currencies to sentiment, a USD sell-off and further rally in risk sentiment could be felt particularly strongly in the USDSEK exchange rate,” according to the USD/SEK forecast from John Hardy, head of FX strategy at Denmark-based Saxo Bank

“The 200-day moving average is all the way down below 10.20. The pair would need to rally back to 11.25 to suggest new highs threaten.”

Analysts at US-based State Street Global Advisors are bearish in their short-term outlook for the krona: “We continue to have a negative tactical view on weaker economic data and rising global risk aversion. In fact, despite the near-flat return, we see the SEK as overbought after the large rally to end the month created a misalignment with the weaker economic and interest rate outlook.”

They added: “The ongoing SEK sales to replenish Sweden’s foreign exchange reserves are also likely to weigh on the currency over the coming months. Long term, the currency remains among the cheapest currencies in the G-10 according to our fair-value estimates. However, we will likely have to see growth bottom out and be able to look forward to economic recovery in the region as well as a stronger EUR in order to unlock that value.”

Similarly, in their USD/SEK forecast, analysts at Danske Bank “stick to our long-held, non-consensus, negative view on the SEK, which is underpinned by the gloomy global growth outlook, associated negative outlook for global and Swedish equities alike and relative monetary policy – a triple whammy if you like. 

“The Riksbank’s 100bp rate hike had no lasting positive impact on the krona. The rate path underwhelmed expectations. In addition, more frontloading will exacerbate the downturn in the Swedish housing market, a headwind for the krona. In all, in line with our reasoning where SEK bulls might be trapped. The Riksbank’s currency silence and continued SEK selling have bolstered the uptrend in EUR/SEK. We continue to see strategic downside for the SEK krona vs EUR and USD.” 

Danske Bank’s USD/SEK forecast for 2023 estimated that the pair could trend higher from 11.13 at the start of the year to a fresh high of 12.04 by the end of the year.

However, forecasts from UK currency exchange firm Monex, Swedish financial services firm SEB Group and French bank Société Générale all projected that the USD/SEK pair could fall back below the 10 mark in the second half of 2023.

USD/SEK analyst forecasts

At the time of writing (14 November), the USD/SEK forecast for 2025 from algorithm-based forecaster Wallet Investor showed the pair ending the year at $11.356, up from 11.046 at the end of 2023 and 10.886 at the end of 2022.

Analysts and forecasters have yet to issue a USD/SEK forecast for 2030.

The bottom line

When consulting the USD/SEK prediction to inform your trading, remember that analysts can and do get their forecasts wrong. We recommend you always do your own research and consider the latest market trends and news, technical and fundamental analysis, and expert opinion before making any investment decisions. Keep in mind that past performance is no guarantee of future returns. And never invest money you cannot afford to lose.


Why has USD/SEK been rising?

The US dollar has climbed to record highs against the Swedish krona in 2022, and while it retreated following lower than expected US inflation data, the krona is still down by 12.5% year-to-date as of 14 November.

Will USD/SEK go up or down?

The direction of the exchange rate could depend on inflation rates and monetary policy in the US and Sweden as well the potential for a global economic slowdown, among other factors.

When is the best time to trade USD/SEK?

Technically, you can trade currency pairs, including USD/SEK, around-the-clock. However, there are certain time slots when forex trading is most busy. This usually occurs around the release of major economic announcements, such as trade data, inflation and interest rates. Whenever significant macroeconomic data is released or new central bank policies are unveiled, the forex pair’s volatility often tends to increase. However, you should make trading decisions after performing your own research and remember that high volatility increases risks of losses. Keep in mind that past performance is no guarantee of future returns. And never invest money you cannot afford to lose.

Is USD/SEK a buy, sell or hold?

Whether you should buy, sell, or hold the USD/SEK currency pair is a personal decision that depends on your trading strategy, risk tolerance and investing goals. You should do your own research into the economic data, government policies and other factors that drive the exchange rate to make an informed decision. Keep in mind that past performance is no guarantee of future returns. And never invest money you cannot afford to lose.

Markets in this article

1.55735 USD
-0.00517 -0.330%
1.00039 USD
-0.005 -0.500%
US Dollar Index
104.277 USD
0.141 +0.140%
10.71017 USD
-0.02342 -0.220%

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