Denmark spent £17bn to defend peg in February

 
Chris Papadopoullos
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THE AMOUNT of foreign currency held by Denmark’s central bank has hit record levels, the bank said yesterday.

The bank is doing everything it can to maintain a constant exchange rate between the Danish krone and the rapidly weakening euro – a peg which has been in place for decades. The bank buys foreign currencies with krone in order to flood markets with the currency and at the same time boost demand for foreign currencies.

Denmark, a European Union member but Eurozone outsider, keeps the krone within a one per cent range around a target rate of 7.46 krone per euro.

The Danish central banks foreign exchange reserves stood at 737.1bn (£72bn) krone at the end February, up from 564.1bn at the end of January.

Its foreign currency holdings are now 65 per cent higher than they were at the start of the year. Denmark has also reduced its interest rates to negative figures in a bid to weaken its currency.

In February, the Swiss central bank rocked markets by abandoning a ceiling it maintained for the value of the Swiss frnac against the euro.