Danish krone appreciation pressure prevails following the DN 15bp rate cut as the EUR750bn ECB bond purchase programme looms.
DN has tools left to fend off DKK appreciation, including using the de facto fluctuation band, FX intervention and rate cuts as well as liquidity-adjusting operations.
We expect DN to cut the CD rate by an additional 10bp to minus 0.30% - most likely already on Thursday on the back of the ECB.
We forecast EUR/DKK at 7.4530 in 1M and 3M and at 7.4325 in 6M and 12M.
Danish real-money funds with EUR exposure and a hedging mandate should hedge EUR exposure due to prevailing EUR/DKK downside risk.
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