Extreme measures taken to secure Denmark’s foreign currency reserves

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The reserves of foreign currency have reached record levels in Denmark as the national government makes attempts to secure their national currency.

The national government in Denmark is pulling out all the stops to reduce pressure on the national currency (krone) to appreciate.

The SNB (Swiss National Bank) has lessened the pressure on krone appreciation as the Nationalbanken has bought 7.3 billion Danish krone ($1.24 billion) of foreign currency.

Therefore, Denmark this year has so far purchased a total of DKK36.9 billion of other nation’s currencies.

Investors hoping to avoid the impact of the eurozone crisis have been making attempts to secure Scandinavian currencies by increasing the cost of exports and damaging economies.

In order to build foreign currency reserves, the Nationalbanken is going to extreme lengths as Danish state loans abroad have raised to DKK9.2 billion in June to a record of DKK511.6 billion.

Jan Stoerup, finance expert, said: "We think ECB (European Central Bank) will cut rates this week, leading Nationalbanken to follow it down with cuts of both the lending and deposit rates.

"The krone is still at such a strong level that Nationalbanken will have to mimic any rate decisions by the ECB."

Investors purchasing Danish government bonds at yields mean they are paying the non-euro country to hold on to their money.

Transferring money to Denmark

If you are looking to invest in Denmark, think carefully about how you will send money abroad online. Foreign currency exchange rates quoted by banks are almost always worse than the exchange rates available through specialist currency dealers.

So if you are sending money to Denmark – which you will inevitably have to do if you are looking to make a property investment, be sure to compare the market before you buy your overseas currency.

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