Danske Financial institution analysts level out that the tempo of FX intervention promoting of EUR/DKK rose to DKK4.1bn in December and since October, Danmarks Nationalbank has intervened for DKK5.5bn.
Key Quotes
“The FX reserve declined from DKK441bn in November to DKK435bn in December. A lot of the fall was as a result of FX intervention promoting of EUR/DKK, which amounted to DKK4.1bn. EUR/DKK traded above 7.4730 on a few days throughout December, which prompted DN to promote EUR/DKK in FX intervention for the third consecutive month. Since October, Danmarks Nationalbank has intervened for a complete of DKK5.5bn.”
“The pair stays supported by a big low cost in FX forwards. We don’t count on this to alter earlier than a Danmarks Nationalbank coverage charge hike. Nevertheless, Danmarks Nationalbank nonetheless has ample FX reserves to attract on, which suggests a charge hike continues to be far away with the present tempo of FX intervention. In our view, Danmarks Nationalbank is more likely to permit the FX reserve to fall to round DKK400bn earlier than delivering a 10bp unbiased charge hike.”
“We see a 10bp hike within the coverage charge to minus 0.65% as a possible situation for H2 this yr, which ought to additional set off a fall in EUR/DKK again right down to the central charge of seven.46038. Therefore, we forecast EUR/DKK at 7.4725 in 1M, 7.4700 in 3M, 7.4725 in 6M and seven.4600 in 12M. We…