Danes fight back against speculators

Danske, Denmark's biggest bank, says it's been inundated by calls from foreign investors. Photo / Thinkstock

Denmark is trying to silence currency speculators as its government and central bank insist it won't follow Switzerland in severing its euro ties.

"Circumstances significantly different from Denmark's" were behind the Swiss National Bank's decision, said Danish Economy Minister Morten Oestergaard.

"Any comparison between Denmark and Switzerland is impossible."

The comments followed a surprise decision by the Danish central bank to cut its deposit rate by 15 points to minus 0.2 per cent, matching a record low set during the darkest hours of Europe's debt crisis in 2012.

Denmark will probably deliver another cut on Friday, after the European Central Bank unveils the details of its bond-purchase programme, according to Danske Bank.

Danske, Denmark's biggest bank, says it's been inundated by calls from foreign investors and hedge funds seeking advice on how to profit from currency market developments.

SEB, Scandinavia's largest currency trader, said it had received similar calls. Their response has been to tell investors that Denmark's three-decades-old peg is backed by the ECB.

Denmark has "a long-lasting and politically firmly anchored fixed-currency policy", Oestergaard said. "This situation should not be overly dramatised."

To underline the point, the central bank sought to reassure investors that its monetary policy arsenal was big enough to resist any speculators trying to test its resolve.

"We have the tools" to defend the peg, said Karsten Biltoft, head of communications at the central bank.

Bloomberg