• Danish FX reserves remain unchanged in March, dn refrains from intervening in FX market

    Source: FxWire Pro - Commentary / 02 Apr 2019 15:00:09   America/New_York

    Danish central bank published its March’s FX reserve and central bank balance sheet data today. The foreign exchange reserve remained the same at DKK 454 billion in March, therefore, Danmarks Nationalbank refrained from intervening in the FX market. Government deposits came in at DKK 117 billion as compared with February’s DKK 103 billion.

    EUR/DKK trade above 7.4660 on some days in March. The rise was partially because of the annual dividend payments from large Danish corporations, which are settled in the second half of March and early April.

    When the Danish central bank had allowed EUR/DKK to rise close 7.4680, before last December, a move in EUR/DKK to 7.4660 would almost certainly have triggered foreign exchange intervention by the central bank. That was not the case in March. Instead a ceiling for EUR/EUR of around 7.4670-80 now appears to be embedded in market expectations, noted Danske Bank in a research report.

    Before last December, when DN allowed EUR/DKK to rise close 7.4680, a move in EUR/DKK to 7.4660 would almost certainly have triggered FX intervention by DN – or at least speculation in the market about the possibility of FX intervention. That was not the case in March. Instead a ceiling for EUR/DKK of around 7.4670-80 now seems to be embedded in market expectations.

    “We forecast EUR/DKK to fall back over the coming months to 7.4570 in 3M and 7.4550 in 6-12M. Hence, we expect DN to remain on the sidelines in terms of FX intervention”, said Danske Bank.

    Government deposits were up DKK 14 billion in March to DKK 117 billion, partially because of payment of corporate taxes. It will head lower from April and onwards, when among things the debt management office has drawn down government deposits to fund the purchase of mortgage bonds and pay tax refunds.

Share on,