The Swedish krona weakened against the euro in the early European session on Thursday, after Sweden's central bank unexpectedly cuts its key repo rate and expanded its asset purchase programme.

The Executive Board of the Riksbank lowered its key rate to -35 percent from -0.25 percent. The bank also extended its government bond purchase programme by a further SEK 45 billion with effect from September and until the end of the year.

The repo rate was previously slashed in March, by 15 basis points. The bank had taken the rate into negative zone with a ten basis points cut in February, when it launched its bond purchase programme. Against the euro, the krona fell to more than a 3-week low of 9.3680 from an early high of 9.2265. At yesterday's close, the krona was trading at 9.2584 against the euro.

If the krona extends its downtrend, it is likely to find support around the 9.50 area.

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