Towards the end of February the Danish Krone plummeted against the Euro amid reports that Denmark was unlikely to abandon its peg with the Euro, and would instead take the action necessary to keep it in place.
Industry experts indicated that the Danish central bank is prepared to implement capital controls, should it prove necessary, and the Krone stumbled accordingly.
At the time, the bank’s head of communications Karsten Biltoft noted; ‘I won’t comment on the comments of others. They have to be responsible for their own words. When we say we will do whatever it takes to defend the Krone’s peg to the Euro, then that is obviously within the boundaries of what is legal.’
The Krone softened to 7.4543 against the common currency and has trended beyond that level over the last fortnight.
Over the course of last week the Euro to Danish Krone exchange rate drifted from a high of 7.4692 to a low of 7.4527 as concerns that the European Central Bank (ECB) might struggle to source the bonds needed to fund its upcoming quantitative easing programme wore on the Euro.
The Danish Krone managed to post a modest gain against its European rival today even as Denmark’s unemployment report showed that joblessness in the nation printed at 4.9% in January.
However, December’s unemployment figure was revised down from 5.0% to 4.9%.
In contrast, the level of unemployment in the Eurozone softened from 11.3% to 11.2% in January, and industry experts predict it will be another 2 years before joblessness in the currency bloc comes in below 10%.
Other Eurozone reports were more encouraging, with the region’s Consumer Price Index printing at -0.3% on the year in February rather than the -0.5% expected, and measures of the German and Italian manufacturing sectors revealing stronger-than-anticipated growth.
The Pound Sterling to Danish Krone (GBP/DKK) exchange rate, meanwhile, softened by over -0.5% over the course of the European session to trade in the region of 10.2280.
As the week progresses, further Danish Krone movement could be caused by Denmark’s Foreign Exchange Reserves report and Industrial Production figures.
Industrial production in the nation is forecast to have increased by 0.46% on the month and 2.8% on the year.
Thursday’s ECB interest rate decision could also have an impact on EUR/DKK trading.