Longer dated EUR/DKK FX forwards continue to trend lower and are now at a level around 7.42, trading in line with strong DKK fundamentals.
Pricing of shorter dated EUR/DKK FX forwards could be influenced by the upcoming tightening of liquidity requirements.
We forecast EUR/DKK at 7.4400 in 1-12M and believe DN will keep the key policy rate unchanged at minus 0.65%.
We recommend Danish pension funds with EUR assets hedge in shorter dated FX forwards. Corporations with EUR payables should hedge on 6M-4Y.
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