Investing.com - Sweden’s krona tumbled against other major currencies on Thursday after the country’s central bank cut rates to record lows in a bid to stave off the threat of deflation.
USD/SEK jumped 1.83% to trade at 6.8279, from around 6.7319 ahead of the decision.
The krona also fell sharply against the euro, with EUR/SEK surging 1.81% to 9.3237.
The Riksbank cut the repurchase rate by 50 basis points to 0.25% from 0.75%. Most economists had expected a cut of 25 basis points to 0.50%.
The bank said it did not expect to start raising the repo rate until the end of 2015.
“Economic activity continues to strengthen,” the Riksbank said in a statement. “However, inflation is lower than expected and it is now assessed that underlying inflationary pressures are clearly lower than assessed in April.”
The decision came after official data showed that the annual rate of inflation in Sweden fell to 0.2% in May, the fifth straight monthly decline. The Riksbank targets an annual inflation rate of 2%.
DKK/SEK was up 1.82% to 1.2483, while GBP/SEK added 1.79% to trade at 11.7125. The krona was also sharply lower against the yen, with SEK/JPY falling 1.68% to 14.9000.