UBS has increased its EUR/SEK exchange rate forecasts, citing concerns over the Swedish krona's low-yielding profile even as Sweden's domestic economic conditions strengthen. The bank raised its December target to 11.00 from 10.50, with further upward revisions through mid-2027.
The Swiss bank now expects the exchange rate to reach 10.90 by March 2027, up from a prior forecast of 10.40, and 10.70 by June 2027, compared with 10.30 previously. A new September 2027 forecast of 10.60 has also been introduced. UBS maintained its existing Norwegian krone (NOK) projections at 10.70, 10.60, and 10.50 for quarter-end through June 2027, adding a September 2027 estimate of 10.50.
The krona's outlook remains constrained by its low-yielding status, according to UBS, despite Sweden's stronger economic fundamentals. The bank expects the Riksbank to maintain its current policy stance, while anticipating a September rate hike from the European Central Bank. UBS noted that a more supportive environment for the krona would require the Federal Reserve to fully price out prospective rate hikes, reducing pressure on lower-yielding currencies.
In contrast, the Norwegian krone continues to benefit from a favorable carry profile among G10 currencies, a still-hawkish Norges Bank, and Norway's position as a net energy exporter. UBS expects Norges Bank to deliver one additional rate hike, aligning with the ECB's projected trajectory and keeping the rate differential between the two economies stable.
