RESERVES

The Danish krone is acquiring a reputation as a safe haven. So, despite the fact that interest rates are negative here, there is upward pressure on the currency.

Denmark's official exchange rate policy is to maintain a peg with the Euro. In order to reduce that upward pressure, the Central Bank sells kroner (which it can do indefinitely) and obtains foreign exchange.

Recently released figures show just how much this tactic is working. Foreign exchange reserves are up from kr.200 billion in 2000 to kr.738 billion today. In February alone the bank sold kr.169 billion of domestic currency.

Walter Blotscher