Denmark: Central bank accelerates intervention, likely to raise rates - Danske

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 5, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Córdoba) - Jens Nærvig Pedersen, Senior Analyst at Danske Bank explains that the central bank of Denmark intervened in the market to cup EUR/DKK upside, bringing international reserves to a more normal level.

    Key Quotes:

    “Denmark’s FX reserve fell to DKK434bn in December, following DKK50bn of FX intervention by Danmarks Nationalbank (DN).”

    “DN thus stepped up FX intervention in December to cap EUR/DKK upside – the ECB did not ease monetary policy as much as expected at its 3 December meeting which contributed to the move higher in EUR/DKK. Since April, DN has purchased DKK in FX intervention for DKK280bn, which has brought the FX reserve down below the level of last year of around DKK450bn and thus to a more ‘normal’ level.”

    “With the ECB expected to stay on hold, we expect DN to deliver a 10bp rate hike to minus 0.65% in the near-term, perhaps as early as Thursday at 16:00 CET, to support DKK and limit the need for additional FX intervention.”
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