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6 Feb 2015
Danish central bank continues to fight for the currency peg – SEB
FXStreet (Barcelona) - The Team at SEB comments on the Danish central bank’s decision to reduce the deposit rates to -0.75%.
Key Quotes
“The Danish central bank reduced the deposit rate for the fourth time in three weeks (-25bps to -0.75%) as the fight for the currency peg intensifies.”
“Inflows to DKK have increased (from DKK 100bn a month to an estimated DKK 50bn during the last couple of days) despite earlier rate cuts and a halt of government bond issuance.”
“The central bank is credible in saying that that there is no upper limit for the size of the currency reserve.”
“As it seems that many of the latest flows are connected to FX hedging by domestic investors, the government has to convince the Danes that the peg will hold.”
Key Quotes
“The Danish central bank reduced the deposit rate for the fourth time in three weeks (-25bps to -0.75%) as the fight for the currency peg intensifies.”
“Inflows to DKK have increased (from DKK 100bn a month to an estimated DKK 50bn during the last couple of days) despite earlier rate cuts and a halt of government bond issuance.”
“The central bank is credible in saying that that there is no upper limit for the size of the currency reserve.”
“As it seems that many of the latest flows are connected to FX hedging by domestic investors, the government has to convince the Danes that the peg will hold.”