off-the-wire

UPDATE 1-Swedish c.bank to start selling government bond portfolio on April 4

Kitco Media
By Reuters
Published:
Updated:
Reuters
(Adds background, detail) OSLO/STOCKHOLM, March 13 (Reuters) - Sweden's central bank will start selling Swedish government bonds on April 4 as part of a plan first announced last month, it said on Monday. "The aim of this is to tighten monetary policy and thus safeguard the inflation target," the Riksbank said in a statement. With inflation surging in the wake of Russia's invasion of Ukraine and lingering effects from the pandemic, the Riksbank has tightened policy at a record pace over the last year. In February, it said it would begin selling off government and inflation-linked debt that it bought as part of its policy of quantitative easing during the pandemic.


The Riksbank said the sales were part of an overall tighter policy, but would also improve the functioning of the bond market, where liquidity has been scarce.


The central bank also hoped that, at the margin, sales would provide a boost for the Swedish crown, which has struggled against the euro. The Riksbank has been concerned the weak crown, which has dropped around 10% in value against the euro over the last year, will make it harder to bring down inflation.


The Feb.9


policy announcement initially gave the crown a boost, but renewed worries about the global financial system, sparked by the failure of Silicon Valley Bank in the United States and hawkish noises from the European Central Bank have undone the Riksbank's good work.


The crown was trading at around 11.47 to the euro on Monday, marginally weaker than ahead of the Riksbank's February policy meeting and at its weakest since the global financial crisis of 2008-9.




(Reporting by Terje Solsvik and Simon Johnson, editing by Essi Lehto and Niklas Pollard)

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