Denmarks Nationalbank (DN) purchased DKK48bn to cap EUR/DKK upside in August

DN has just published August's FX reserve and balance sheet. In August, the FX reserve declined to DKK536 from DKK583bn in July. DKK48bn of the fall was due to DN purchasing DKK in FX intervention. DN has intervened in the FX market to support DKK, EUR/DKK traded above the central rate of 7.46038 during August.

Since April, DN has purchased DKK190bn in FX intervention to cap EUR/DKK upside, which has brought the FX reserve markedly down since the peak in March at DKK737bn.

"Nevertheless, the FX reserve is still roughly DKK90bn above the level from December last year, i.e. DN has ample room to continue its current approach of solely using FX intervention to maintain DKK tightly pegged to EUR for another two to three months at the current pace of intervention", says Danske bank.