Denmark Warns Over Pressure on Krone - The head of Denmark's central bank has warned that the Danish krone is coming under intense pressure from investors seeking a haven in Europe and betting that the currency's peg to the euro could be cracked by the crisis. |
|
Business Related Topics...
Computer Related Topics...
Entertainment, Recreation & Sports Related Topics...
Health & Fitness Related Topics...
Home & Family Related Topics...
Shopping Related Topics...
Would you like to submit articles to our site? Have a question or a problem?
You are here: DIME Home > Investing > Denmark Warns Over Pressure on Krone
The head of Denmark's central bank has warned that the Danish krone is coming under intense pressure from investors seeking a haven in Europe and betting that the currency's peg to the euro could be cracked by the crisis.
Author: Charlotte Rivington
Date: Jul 24, 2012 - 10:28:25 AM
The head of Denmark's central bank has warned that the Danish krone is coming under intense pressure from investors seeking a haven in Europe and betting that the currency's peg to the euro could be cracked by the crisis.
Nils Bernstein, the governor of the Danish central bank, said that the upward pressure on the krone was the most severe he had seen in his seven years as governor, and warned that negative interest rates could be on the cards if the problem continues.
"You can see from our history that we like to keep the krone within a narrow band, half a percentage point or less," said governor Nils Bernstein. "I think we have to tools to continue to do that, and if it is necessary to move into negative interest rate territory we will be ready for that."
Investors are pouring money into Danish bonds attracted by the country's narrow budget deficit and current account surplus, leaving it fighting to maintain the very narrow peg with the euro it has held since 1999. Rates were cut twice in the past month to a record low of 0.45 per cent.
Making life harder for the central bank, some hedge funds are taking long positions in the Danish krone as insurance against a collapse of the single currency, according to currency trading desks at investment banks.
"Just because a peg has been in place a long time doesn't mean it cannot break. It just means that it's cheaper," said Stuart Fiertz, president of Cheyne Capital, a London-based hedge fund. "If the euro cracks, the pressure to cut the peg will be overwhelming."
Denmark is in a similar predicament to Switzerland, which has been spending tens of billions of Swiss francs to buy euros and defend its own floor against the single currency after a resurgence in eurozone turmoil led to a spike in demand.
The krone is seen by some investors as a less risky bet than the franc because the Danish central bank has set a peg against a krone, rather than simply a floor, and so there is little danger of it weakening in the event of a recovery in the eurozone.
The Danish central bank spent more defending the krone last month than any time since the start of 2010 and it has seen reserves more than double from about Dkr200bn ($34bn) in 2008 to Dkr500bn today.
The currency market in Danish krone is still relatively small, accounting for just 0.6 per cent of average daily turnover. That compares with 6.4 per cent turnover for the Swiss franc and 39 per cent for the euro.
Other potential currency havens in Europe have been struggling amid the escalation in the eurozone crisis. The pound has fallen in value in recent weeks as investors have priced in the possibility of further monetary easing in the UK.
By Michael Stothard in Stockholm and Alice Ross and Robin Wigglesworth in London
Find out more about Cheyne Capital and read the original article here
Apartments & Villas in DubaiJul 10, 2011 - 9:40:06 AM The Dubai real estate and property market is known for its high standard quality and luxurious life style that it offers to the residents of Dubai. There have been a number out class and fascinating construction projects in Dubai that has made the world adore Dubai’s property developers, constructors, engineers, and architectures. In Dubai real estate, its not about constructing a project but about being the best developing some thing extraordinary, unique, while maintaining high standards of quality and comport and these qualities have become a big reason for the attraction of investor and buyers in the real estate and property market of Dubai.... [Read the full story] |
Oil & Gas Investments Risk ProfilesJul 7, 2011 - 11:14:13 AM Unity Resources Oil & Gas Education Series - Free White Papers... [Read the full story] |
Bamboo Investments - The Greener Way to Make MoneyApr 19, 2011 - 4:17:19 PM As the news is constantly full of information supporting scientific papers on global warming, people are increasingly looking for ways to generate money whilst saving their conscience and bamboo is an ideal medium term investment. It is an extraordinary plant in that it sequesters four times more CO2 than ordinary timber, and produces up to 35% more oxygen thanks to its quick growth.... [Read the full story] |
Benefits of CFD TradingApr 11, 2011 - 9:56:39 PM CFD’s also referred to as contracts for difference has gained huge popularity in the past few years. CFD is nothing but an agreement between the buyer and seller agreeing to exchange the difference in the current value of a share, currency, commodity or index and its value at the end of the contract. As long as this difference is positive, the seller would pay the buyer. On the contrary when this difference becomes negative, the buyer loses his money.... [Read the full story] |
Search for articles: |
Latest Articles in All Categories |
Putting Up a Small Commercial Printing Business |
So You Might Be Unemployed And Desire To Become A San Francisco Real Estate Investor Now |
Meditation and Mindfulness: Dealing With Emotion |
CPA Websites: Five Essential Ideas for Composing Convincing Articles |
Set Goals In Order to Come Up With Your Action Plan |
Is the Air in Your Home Safe to Breathe? |
Coarse Fishing Tackle Review: The JW Young 13ft Trotter Rod |
Section 1031 Exchanges For San Diego Real Estate Investors |
Phoenix Real Estate Investing For Highest Possible Earnings |
Legendary are the Volk Racing TE37 Wheels |
Developing the Next Generation Wall Station (ChaseDesk™) for Healthcare - A Case Study |
What are step down transformers? |
Introducing Sharehype, the Revolutionary Tool for Online Marketers |
Rewards To Shopping For Austin Real Estate On The Web |
Hydroponics for Beginners |
Would you like submit your articles and have them approved on a priority status? Find out more about how you can become a Priority author for pennies a day! Click here.
Dime-co.com Home |
|
|
|
|
|
|
|
|
|
|
|
|
|
Disclaimer: Dime-Co.Com is an online information article and video article network. All articles, video articles, comments, and other features herein are for informational purposes only and are provided "as is" without warranties, representations or guarantees of any kind. The views and opinions expressed in an article, comments, links or blogs are the author's own, and not necessarily those of dime-co.com's owners. For full disclaimer, please read our TOS.