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Government Finances And Excess Liquidity At A Crossroads

Published 04/25/2018, 03:02 AM
Updated 05/14/2017, 06:45 AM

The surge in government deposits and corresponding drop in the net position along with the uncertainty about re-lending to social housing this year puts the DKK FX and FI market at a crossroads.

In the following analysis, we outline three scenarios for how government finances and the net position may evolve over the coming year - a base case scenario and a high and low case risk scenario and how they would affect the DKK FX and FI market.

In our base case scenario, EUR/DKK FX forwards will trade at a relatively high level in Q1 next year and EUR/DKK spot will fall to around 7.4425 on 12M. The FI market should stay supported with the DGB 0.5% 11/27 bond to trade at par with Germany (DBR 0.5% 8/27) in the next 3-6M.

To read the entire report Please click on the pdf File Below:

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