From champion to laggard: The SEK trading playbook

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From champion to laggard: The SEK trading playbook

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FX Viewpoint

From champion to laggard: The SEK

trading playbook

SEK: Back near fair value, turning neutral 09 July 2026

SEK has gone from the best-performing G10 currency in 2025 (+20%) to the worst G10 FX Strategy

performer year-to-date (-5%). After this sharp reversal, we reassess the drivers of SEK Global

and conclude that the currency is now trading close to fair value. We therefore turn

neutral into year-end. A more hawkish Fed may keep SEK under pressure in the near Table of Contents

term, but resilient Swedish growth, European fiscal and defense spending, and modest

Factor 1: USD strength = SEK weakness 2

Riksbank tightening should provide support over a longer horizon.

Factor 2: Global risk sentiment 4

Four forces explain most SEK moves Factor 3: Swedish economic performance 6

Our framework focuses on the four drivers that have historically explained most major Factor 4: The Riksbank 9

SEK rallies and sell-offs: the USD, global risk sentiment, Swedish economic performance A potential 5th factor: Capital flows 13

and the Riksbank. In the sections that follow, we examine each driver in turn, showing Simple valuation framework 18

how they have influenced SEK over the past two decades and what they imply for the Equilibrium dynamics 20

outlook today.

The overlooked factors behind SEK’s volatility MarcusFX StrategistBoman

We also examine several less appreciated influences on the currency. Equity flows often MLI (UK)

+44 20 7996 3322

matter more than Sweden’s current-account position, pension-fund hedging can amplify marcus.boman@bofa.com

SEK’s high-beta behaviour, and Riksbank communication on the exchange rate has at Michalis Rousakis

times had a significant impact on performance.