Why SEK Is Poised to Crush NOK as the Geopolitical Storm Clears – Here’s What the Smart Money Is Betting On

Ever wonder how two neighbors—Norway and Sweden—can dance to entirely different economic tunes, especially when it comes to their currencies? It turns out, the magic (or mystery) lies in their contrasting ties to energy prices. While Norway’s krone wobbles under the weight of shifting oil and gas markets, Sweden’s krona seems to be charting a sturdier course, particularly as geopolitical tensions begin to thaw. Throw in an EU-US trade deal shaking up the scene and inflation numbers that don’t quite behave as expected, and you’ve got a fascinating cocktail for currency watchers. As the Riksbank holds firm—at least for now—the real question is: could this be Sweden’s moment to shine in the Scandinavian currency spotlight? Hang tight, because the story’s unraveling right before our eyes. LEARN MORE.

Scandinavian currencies should also do well if geopolitical risk is priced out, with Sweden’s krona likely better positioned than Norway’s krone due to opposite exposures to energy prices, ING’s FX analyst Francesco Pesole notes.

Opposite energy price exposure favors Swedish Krona

“The drop in NOK/SEK yesterday might be attributed to that. Sweden also reported an acceleration in July CPIF inflation to 3.0%, but that was widely expected, and core inflation actually decelerated faster than anticipated to 3.1%.”

“We still aren’t forecasting any extra cut by the Riksbank, but admit this has become a much closer call after the EU-US trade deal. Anyway, markets are fully pricing it in, so we aren’t concerned about our bullish medium-term call on SEK.”