Danske Markets

Shorter-dated EUR/DKK FX forwards have recovered from the low levels they traded at before the summer to a level close to where they trade in normal times.

Renewed focus on political risks in Europe and potential for further ECB easing could send EUR/DKK down to 7.4425 on a 3-12M horizon.

We recommend that Danish pension funds with a hedging mandate hedge EUR exposure in shorter-dated FX forwards (up to 12M), or in longer-dated FX forwards trading above the central rate of 7.46038, i.e. on 5Y and beyond.

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