Danish Crown Depreciates After Rate Cut

The Danish crown retreated from 2 1/2-year highs against the euro on Monday after Denmark’s central bank cut interest rates deeper into negative territory in a bid to limit further gains in the currency.

Denmark cut the deposit rate by 0.15 percentage points to -0.20 percent.

The crown fell to 7.4370 crowns per euro from a high of 7.4300 struck earlier in the day—its highest since mid-2012—as investors seeking safe-haven currencies switched from the Swiss franc in the wake of Switzerland’s move to abandon its currency cap and impose hefty negative rates.

Traders said some speculators are betting Denmark could be next to abandon its currency peg to the euro, given expectations for prolonged euro weakness if the European Central Bank opts for quantitative easing. Some analysts, however, said they expected the Danish peg to remain intact.

Denmark’s OMXC 20 share index hit a record high after the decision and was last trading 2.4 percent higher on the day.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza