Danmarks Nationalbank (DN) hiked its key coverage price 60 bps to 1.25%. The unfold to ECB’s key coverage price is now -0.25%, which economists at Danske Bank suppose will be sufficient to weaken DKK and cease the want for FX intervention.
DN ‘only’ hikes 60bp to give up DKK strength
“As we expected, Danmarks Nationalbank (DN) opted for a smaller fee hike than ECB – ECB hiked its key coverage price 75bp today, however DN solely 60bp. It widens the unfold to ECB’s key coverage fee to -0.25%. The selection comes after large-scale FX intervention.”
“We anticipate the adjustment is sufficient to ship EUR/DKK greater and stop the want for similarly FX intervention promoting and greater changes of the hobby fee spread.”
“We seem to be for EUR/DKK to upward jab closer to the pinnacle cease of this year’s buying and selling range, i.e. to round 7.4450, and for DN to comply with ECB 1:1 from here, i.e. to hike to 2.25% in February.”