Delicious Danish

Betting on the Krone

Everyone loves the krone.
  • Why it matters

    Why it matters

    As currencies like the Danish krone and Swiss franc rise against a weakening euro, prices for exported products from those countries also rise.

  • Facts


    • Denmark tries to peg the krone at just over 7.46 to the euro, with a 2.25 percent range of fluctuation.
    • The Danish central bank has just lowered the interest rate to minus 0.5 percent to counter speculations on the krone.
    • Only about 0.8 percent of all global currency trades are made in Danish krone, as opposed to about 5 percent in Swiss franc.
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Lars Rohde, the head of the Danish central bank, Nationalbanken, is fighting windmills like Don Quixote these days. Only his foes are not imaginary – they are international investors gambling on the Danish krone.

The speculation is threatening a currency connection that has existed for three decades, first to the German deutschmark and now to the euro.

Mr. Rohde wants to maintain the link between the krone and euro under all circumstances.

The central bank in Copenhagen has long sought to peg the krone at just over 7.46 to the euro, with a plus or minus 2.25 percent range of fluctuation.

But last month, after Switzerland freed its franc, the Danish krone appreciated strongly against the euro and dollar. The European Central Bank’s new government bond-buying stimulus makes the krone even more attractive.

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