EUR/DKK: to remain at 7.4400 in 1-12M - Danske Bank

Analysts from Danske Bank forecast EUR/DKK at 7.4400 in 1-12M and they believe that the Danish central bank will keep the key policy rate unchanged at minus 0.65% in 12M.

Key Quotes: 

“Danmarks Nationalbank (DN) has just published August’s FX reserve and central bank balance sheet. The FX reserve was unchanged at DKK464bn in August, as DN did not need to intervene in the FX markets. The government’s deposits were DKK127bn in August, up from DKK109bn in July.”

“It marks the fifth month in a row that DN has been able to stay on the sidelines in FX markets.”

“Danske Bank’s DKK Exchange Market Pressure Index (EMPI) continues to signal persistent downward pressure on EUR/DKK, as DKK remains supported by strong economic fundamentals, e.g. a rising current account surplus. In our view, we are likely to see EUR/DKK continue to trade at a low level, with DN ready to step into the market around the level of 7.4330-7.4340.”

“We forecast EUR/DKK will trade around 7.4400 in 1-12M and believe DN will keep the key policy rate, the rate of interest on certificates of deposit, unchanged at minus 0.65% in 12M.”