Danske Bank analysts point out that Danmarks Nationalbank (Central Bank of Denmark) intervened again in the foreign exchange market in December. They reckon it needs to raise interest rates again 10 basis points less than the European Central Bank did in early February.
The Central Bank of Denmark intervenes again
“Danmarks Nationalbank (DN) sold another DKK 5.8bn in FX intervention in December to bring the EUR/DKK pair to around the 7.4360-65 level. This intervention is on top of the DKK 5.8bn intervention kroner in the foreign exchange market.This is on top of the DKK 3.7bn it sold in November and brings the total amount of FX interventions to DKK 9.5bn since it widened the key interest rate spread with the ECB in September”.
“EUR/DKK is still trading near the bottom of 7.4360-65, which means that the ND will probably have to make another move with the official interest rate. We expect it to rise 10bp less than the ECB on February 2, that is, to raise 40bp in response to a 50bp rise by the ECB, and widen the spread to -35bp.”
“State deposits were DKK 161.8 billion in December, which is more than enough to cover the gross financing need of DKK 128 billion in 2023.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
