Currencies Show How a Small Shift in Prices Can Mean Such a Lot
- Pound, Swedish krona driven by inflation giving policy clues
- Price growth is the `key variable' for central banks: Commerz
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The contrasting fortunes of the U.K. and Swedish currencies highlight how even a small change in inflation can send exchange rates rising, or falling, as investors use the data to gauge the policy direction of their central bank.
The pound was the second-biggest loser among rich-world currencies on Tuesday, while the krona posted the largest gain as the nations announced muted changes in consumer-price growth. Annual inflation in Britain fell to minus 0.1 percent in September, against economists’ forecasts for the rate to remain stuck at zero. Prices in Scandinavia’s largest economy rose 0.1 percent, also against a prediction of nil.