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Denmark raises repo rate to defend euro peg

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Denmark raises repo rate to defend euro peg
Photo: Colourbox
07:51 CET+01:00
Denmark's central bank on Thursday said it had increased its repo rate a notch to defend its currency peg to the euro which has been rising against the krone.
The repo rate, which remunerates short-term deposits with the central bank, went up 0.1 points to -0.65.
 
The key lending, discount and current account rates all remain unchanged.
 
The central bank has been intervening in currency markets to lift the weakening krone against the euro, depleting its foreign reserves in the process.
 
Narrowing the differential with European Central Bank rates makes the Danish currency more attractive to investors, likely causing an inflow of foreign funds and a rise in the krone.
 
The krone was trading at 0,1340 euro late on Thursday following the bank's move, exactly the level which Denmark has been aiming for since 1999, when the European single currency was introduced.
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