Underperforming Ahead Of Riksbank; Analysts Weigh In On Dividend Effect

SEK continues to underperform the G10, with EURSEK 0.35% higher and NOKSEK 0.5% higher today.

• Today's price action has seen EURSEK reach new YTD highs, breaching the Jan 19 high at 11.4266.
• SEK weakness over the past 2 weeks may set the tone for the Riksbank's communication at its monetary policy meeting on Wednesday.
• While the rate path is expected to be revised lower, renewed SEK weakness may be a key obstacle to the Riksbank easing rates in May (i.e. before the ECB/Fed).
• Our full Riksbank preview will be released later today.
• Separately, the Swedish equity dividend season runs from late-March to late-May, which may impact SEK flows on large dividend days. See below for analyst views on SEK seasonality w.r.t dividend season:

Danske

• "The seasonality is vague at best and when the SEK does weaken during the dividend season, it can often be blamed on other factors".
• "While seasonality is illusive, we advise investors to keep an eye on the big dividend days as there might be a transitory krona impact due to repatriation".
• "We recommend to monitor dividend-heavy days as displayed on the next three pages, but stress that reinvestment is often default, thus the flow stories should not be exaggerated".

SEB

• "EUR/SEK has historically moved higher during the Swedish equity dividend season - end of March to late May".
• "This week is the 3rd largest but the estimated outflow is rather small as many of the first pay out in other currencies than SEK".