The halt of government bond issuance by Danmarks Nationalbank does not seem to have been the magic bullet in terms of easing DKK appreciation pressure.
We expect further easing will be needed, which is best carried out through FX intervention purchases and a lower CD rate.
We forecast EUR/DKK to stay at 7.4440 on 1M to 12M and a cut of the CD rate by 15bp to minus 0.65% in 3M.
Given the steepness of the Danish swap curve, we still see value in receiving Danish swaps, preferably in the 1-5Y segment. Danish real-money funds with EUR exposure and a hedging mandate should hedge their EUR exposure due to the prevailing downside risk in EUR/DKK.
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