Sweden’s krona declined to the weakest level in almost two years against the euro amid speculation the nation’s central bank will cut interest rates at least once this year, damping demand for the currency.
The euro fell for the first time in three days against the dollar as Germany’s top court questioned a rescue plan for debt crisis-hit euro-area nations and asked Europe’s highest judges to rule on its legality.
Sweden’s krona appreciated versus the euro and the dollar as the nation’s government raised its economic growth forecast for the next two years, underpinning the case for the central bank to increase borrowing costs.
Central banks in Sweden and Norway are bowing to pressure to delay interest-rate increases next year as the prospect of a global recovery dwindles and borrowing costs in the U.S. and Europe remain low.
Sweden’s central bank raised its benchmark repurchase rate for the seventh time in a year and repeated a pledge to continue tightening policy as the country’s economic expansion withstands Europe’s debt crisis.