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6 Feb 2015
DN opened the door for FX intervention – Danske Bank
FXStreet (Edinburgh) - Following Thursday’s CD rate cut, the DN will start to consider intervening in the FX markets in order to alleviate buying pressure from the DKK, suggested Allan von Mehren, Chief Analyst at Danske Bank.
Key Quotes
“Denmarks Nationalbank (DN) yesterday cut the rate of interest on certificates of deposits further by 25bp to minus 0.75% bringing it at par with SNB”.
“In addition to the rate cut DN offered some additional comments on monetary policy in the press release – comments that were reiterated by DN governor Lars Rohde afterwards in a live interview”.
“In our view, the next step for DN, if the downward pressure on EUR/DKK remains, will be to put more emphasis on FX intervention purchases, which would likely be the best way to outlast further DKK appreciation pressure, albeit the end result would be a significantly larger FX reserve”.
“Note also that Rohde did not rule out QE in either government or mortgage bonds”.
Key Quotes
“Denmarks Nationalbank (DN) yesterday cut the rate of interest on certificates of deposits further by 25bp to minus 0.75% bringing it at par with SNB”.
“In addition to the rate cut DN offered some additional comments on monetary policy in the press release – comments that were reiterated by DN governor Lars Rohde afterwards in a live interview”.
“In our view, the next step for DN, if the downward pressure on EUR/DKK remains, will be to put more emphasis on FX intervention purchases, which would likely be the best way to outlast further DKK appreciation pressure, albeit the end result would be a significantly larger FX reserve”.
“Note also that Rohde did not rule out QE in either government or mortgage bonds”.