2 Feb 2015
Denmark suspended issuance of bonds – Danske Bank
FXStreet (Edinburgh) - According to Jens Pedersen, Senior Analyst at Danske Bank, the Nationalbanken has suspended its domestic and foreign bond issuances.
Key Quotes
“Danmarks Nationalbank (DN) has just announced that, following an agreement with the Ministry of Finance, issuance of domestic and foreign government bonds is suspended immediately”.
“The suspension of government bond issuances may help ease the appreciation pressure on DKK in two ways”.
“First, it will add liquidity to the market as government expenses will be covered by a draw on the government’s account at the central bank”.
“Second, it will ease demand for Danish government bonds and thus ease the demand for DKK triggered by a move from EUR assets into DGBs”.
“The move underlines the strong commitment to the Danish fixed exchange rate regime both at the central bank and with government as the Danish debt management office has now effectively joined the defence of the peg”.
“This move should help ease the immediate appreciation pressure on the DKK and shows that all instruments in the toolbox are currently available”.
“Hence, we cannot rule out that DN will resort to other unconventional measures such as a bond purchase programme, either by using the government deposits or the DKK printing press if that is deemed necessary”.
Key Quotes
“Danmarks Nationalbank (DN) has just announced that, following an agreement with the Ministry of Finance, issuance of domestic and foreign government bonds is suspended immediately”.
“The suspension of government bond issuances may help ease the appreciation pressure on DKK in two ways”.
“First, it will add liquidity to the market as government expenses will be covered by a draw on the government’s account at the central bank”.
“Second, it will ease demand for Danish government bonds and thus ease the demand for DKK triggered by a move from EUR assets into DGBs”.
“The move underlines the strong commitment to the Danish fixed exchange rate regime both at the central bank and with government as the Danish debt management office has now effectively joined the defence of the peg”.
“This move should help ease the immediate appreciation pressure on the DKK and shows that all instruments in the toolbox are currently available”.
“Hence, we cannot rule out that DN will resort to other unconventional measures such as a bond purchase programme, either by using the government deposits or the DKK printing press if that is deemed necessary”.