The Danish Central Bank is struggling to maintain its fixed exchange rate against the euro. This rate cut is the fourth since mid-January. The latest rate cut, before today, took place on 29 January, when to 0.50 percent.
– The fixed exchange rate policy is a mandatory feature of the Danish economic policy, and has been since 1982. The National Bank has the necessary tools needed to defend valutapolitken as long as it will be necessary, said Director of National Bank in a press release.
Denmark now wants to reduce pressure on the domestic currency and therefore trying to weaken it. On Friday asked the Finance Ministry, on the advice of the Central Bank, the new issuance of government bonds to bring down long-term rates and reduce the inflow of foreign capital. The opponent is foreign capital flowing into the country and strengthen the currency.
The interest rate cut is made in the wake of the Swiss central bank’s decision to let its currency freely, and the ECB’s decision to begin supporting purchases of government bonds.
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