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ECONOMY

Denmark’s central bank cuts interest rates in response to strong currency 

The central bank, Nationalbanken, has slightly lowered interest rates in response to the krone’s currently strong position against the euro.

Danish 50 krone notes in production. Denmark has adjusted its interest rates to maintain a consistent value of the krone against the euro.
Denmark has adjusted its interest rates to maintain a consistent value of the krone against the euro. Photo: Ólafur Steinar Gestsson/Ritzau Scanpix

Interest rates for current accounts, savings and loans are decreased by 0.1 percent, to 0.6 percent, 0.6 percent and 0.45 percent respectively.

“The interest rate decrease occurs based on Nationalbanken’s purchase of currency on the market,” the central bank said in a statement.

Nationalbanken is required to maintain a consistent exchange rate between the krone and the euro.

As such the bank is adjusting interest rates with momentum behind the Danish economy, job vacancies at a high level, house prices soaring and inflation conceivable.

“The National Bank has one mandate and one only. And that is to ensure the policy of foxed exchange with the euro. And we have seen in recent times that the krone has been a bit on the strong side and that the National Bank has sold Danish kroner,” Danske Bank senior analyst Olai Milhøj told news wire Ritzau.

“So now the dynamic will be changed a bit be reducing interest to make it a bit less attractive to hold Danish kroner,” he added.

The interest rate change is however discrete enough that it will likely only impact large scale speculators.

The change in the price of a euro is less than one øre (a hundredth of a krone) and is unlikely to impact interest rates offered by banks.

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ECONOMY

Economically stable Denmark signals end of coronavirus help for businesses

Denmark is to withdraw financial support for businesses impacted by the coronavirus pandemic as the country continues to return to normal conditions following the end of general Covid-19 restrictions.

Shoppers have returned to streets in strong numbers. Denmark has signalled the end of Covid-19 support for businesses by the end of the year.
Shoppers have returned to streets in strong numbers. Denmark has signalled the end of Covid-19 support for businesses by the end of the year. Photo: Signe Goldmann/Ritzau Scanpix

New rules taking effect on Thursday mean that only businesses which have lost 45 percent or more of their turnover due to the pandemic can apply for help paying for overheads.

The provision will remain in place for the rest of the year, according to a statement from the Ministry of Industry, Business, and Financial Affairs.

Previous rules, in effect since July, also allowed self-employed people with losses of 45 percent or more of turnover to be compensated by up to 90 percent. That expires as scheduled on Thursday.

“Denmark’s economy is barrelling forwards after corona. More Danes than ever are working and the economy is expected to grow by 3.8 percent this year,” the ministry said in a statement.

Unemployment levels have been falling throughout the period following the post-lockdown reopening.

The number of people out of work fell by 5,600 to a total of 101,300 between July and August, according to seasonally-corrected data from Statistics Denmark. That brought unemployment to its lowest number since January 2009.

READ ALSO: Why does Denmark have so many job vacancies? 

An estimate for economic growth during the second quarter of this year has meanwhile been raised after an earlier projection proved too low, revised Statistics Denmark figures show.

GDP is now estimated to have grown by 2.8 percent in the second quarter. The earlier estimate was 2.3 percent.

“We are now living in a society without corona restrictions. And that makes a big difference to Danish businesses, which for the most part have got their wheels turning again,” businesses minister Simon Kollerup said in the statement

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