Denmark’s central bank has not intervened in the currency market in the month of January. The FX reservesThe Danish krone is trading a bit weaker; however, it is still at strong level against the euro. The Danish central bank’s sales in December reached DKK 0.7 billion as part of its defence of Denmark’s fixed exchange rate regime, noted Nordea Bank. It was the first time the central bank had to intervene in the currency market since June 2016.
In January, the Danish currency had been trading a bit weaker against the euro: the EUR/DKK pair rose to 7.438 now from 7.433 at the end of 2016. This minor decline happened without any of central bank’s intervention.
The Danish krone is expected to be greatly stable in the coming months. The current interest rate differential to the euro area seems to be the correct one to keep a stable krone exchange rate at about 7.44. This is likely to be slightly stronger when compared with earlier. However, as the currency reserves are also slightly lower than the average levels seen in the recent years, this might be the optimal level for the bank, stated Nordea Bank.
“We consequently expect the central bank’s policy rate to be maintained at the current -0.65 percent until end-2017”, added Nordea Bank.
