Denmark Announces Currency Peg is “Secure”; 12 Denials in 1 Day; Deposit Rate Cut to -0.20%; More Rate Cuts Coming?

Courtesy of Mish.

Here’s the quote of the day: Denmark’s Finance Minister, Morten Oestergaard, says the Danish currency peg of the krone to the euro “is secure.”

Banks Battle Speculation Denmark’s Euro Peg at Risk

Bloomberg reports Banks Battle Speculation Denmark’s Euro Peg at Risk

Quotes of the Day Synopsis

1. The Danish currency peg “is secure,” Economy Minister Morten Oestergaard said.
2. Carl Hammer, chief currency strategist at SEB in Stockholm, says he’s been trying to make clear to callers that it’s “highly unlikely” Denmark will alter its exchange-rate regime.
3. “Obviously, we think it’s completely unrealistic” that Denmark will abandon its peg, Jan Stoerup Nielsen, an economist at Nordea Markets in Copenhagen, said by phone. “But that doesn’t seem to be stopping the speculation.”
4. Central-bank GovernorLars Rohde said last month “there’s still some way to go” before Denmark tests the limit of its monetary tool box.
5. “There’s no point in speculating that the currency peg will fall,” Arne Lohmann Rasmussen, head of fixed-income research at Danske in Copenhagen, said by phone.
6. “There are always rumors in the market that have nothing to do with reality,” Klaus Rasmussen, chief economist at the Confederation of Danish Industry, said by phone. 
7. Dropping the euro peg  would be “totally silly,” said Klaus.
8. David Woo, of Bank of America Merrill Lynch, suggested that the DNB would now seek to defend the peg more strongly than before, “as markets potentially question the central bank’s commitment to maintaining it”. 

That’s eight denials (or strong defense of the peg). Quote number eight is from a Telegraph article linked to below. (Four more coming from Danish Central bank below).

I have no way of measuring but I speculate this is some kind of record, at least as pertains to currencies.

Denmark Next?

The Telegraph asks Will Denmark be the next country to cause currency chaos?

Denmark is the last major economy to peg its currency – the krone – to the euro, and has conducted a fixed exchange rate policy since the 1930s.

Given that Thomas Jordan, the SNB’s chief, declared “you can only end a policy like this by surprise. It is not something you can debate for weeks”, traders are likely to be more wary of the DNB.

Traders were caught off guard by the SNB. The franc was viewed as incredibly stable until the moment of the announcement.
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