Few taking high risks on the Swedish fixed-income and foreign exchange markets
News Although risk taking has increased somewhat over the past six months, a majority of participants in the Swedish fixed-income and foreign exchange markets still say they are taking small or neutral risks. This is shown by the Riksbank's Financial Markets Survey conducted in February. The foreign exchange market for Swedish krona is perceived to be functioning better now than in the autumn, although the Swedish fixed-income market is perceived to be working slightly less well.
Almost eight out of ten respondents consider the FX market for SEK to be working well or very well, which can be compared with last autumn, when almost six out of ten gave this response. The Swedish fixed-income market, on the other hand, is perceived to be functioning less well than in the autumn, but better than prior to the outbreak of the coronavirus pandemic. Four out of ten respondents consider the market to be working well. This is a decline compared with the autumn, when half of the respondents considered the fixed-income market to be working well.
The Riksbank’s asset purchases, which were introduced as a measure during the coronavirus pandemic, have had a large or very large impact on how the Swedish fixed-income market has functioned according to the respondents. Many respondents consider that liquidity and the way the market functions have deteriorated as a result of these asset purchases. But there are also several who point out that the asset purchases at the beginning of the pandemic stabilised the market, and some consider that the purchases are still having a positive effect on stability.
FINANCIAL MARKETS SURVEY
The Riksbank sends out the Financial markets survey twice a year to participants active in the Swedish fixed-income and foreign exchange (FX) markets. The purpose of the survey is to gain an overall picture of participants’ views on the Swedish financial markets – how they are working, what market activity looks like and what risks participants see in the Swedish financial system going forward. This report presents the results of the survey responded to in the period 15–26 February 2021. The report is based solely on participants’ responses and is not an account of the Riksbank’s assessments.