Denmark's prime minister voiced confidence Tuesday that the Nordic country's central bank would be able to defend the krone's peg to the euro.
"I have full confidence that the National Bank will keep its fixed exchange rate policy... I do not doubt it for a second," public broadcaster DR quoted Prime Minister Helle Thorning-Schmidt as telling parliament.
While Danes voted not to join the euro, Denmark has since the 1980s pegged the krone to limit exchange rate volatility.
Since 1999 the krone has not been allowed to deviate by more than 2.25 percent from a fixed rate of about 7.46 krone per euro.
Switzerland's decision to remove its peg to the European single currency has made Denmark the last remaining European currency linked to the euro.
With the value of the euro sliding due to European Central Bank's decision to inject massive amounts of liquidity into the eurozone economy through a bond buying programme, the Danish central bank has had to take radical measures to defend the krone's exchange rate.
The central bank has cut its deposit interest rate three times between January 19 and 29, bringing it down to -0.50 percent.
On Tuesday the bank announced that it has spent 106.3 billion krone ($16.36 billion, 14.3 billion euros) -- almost 6 percent of the country's GDP -- on foreign exchange in an attempt to bring down the value of the Danish krone.
The unprecedented intervention "breaks all records" for Denmark, according to Peter Bojsen Jakobsen, an economist at Sydbank, adding that the action reveals the determination of Danish authorities.
"We believe that the fixed exchange rate policy will most likely survive the current situation just as it survived earlier financial crises, IT and housing bubbles and currency crises," he added.
The central bank's actions have also led to exceptionally low lending rates with the country's largest commercial bank Danske Bank offering mortgages at 1.5 percent over 20 years.
Source: AFP
GMT 20:32 2018 Friday ,30 November
Turkey hails China's 1st import expo, gets ready for next sessionGMT 17:22 2018 Friday ,26 October
US Trade and Development Agency official meets with ministers in EgyptGMT 11:56 2018 Wednesday ,17 January
BlackRock chief calls on CEOsGMT 12:01 2018 Wednesday ,03 January
Banks 'reticent' to work with SudanGMT 18:43 2017 Thursday ,28 December
Al-Sukait Tackles Investors’ ContributionGMT 18:34 2017 Wednesday ,27 December
Shaath reveals opening date of Metro third lineGMT 07:25 2017 Wednesday ,06 December
Abdelkader underlined role of construction sectorGMT 07:15 2017 Thursday ,09 November
Al Walwel says Palestinian people ableMaintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©
Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©
Send your comments
Your comment as a visitor