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Denmark Goes NIRP-er; Slashes Rates To -20bps Amid Currency Peg Fears

Tyler Durden's picture




 

It appears the actions of the Swiss National Bank have prompted questions for all central banks as cash squirts away from the looming Euro crash (if France's Hollande is to be believed) to any and every other currency. As the Danish Krone rallied to its strongest in 10 years against the EUR in the last few days, worries over the currency breaking its peg have apparently prompted the Danish Central Bank into action:

  • *DANISH CENTRAL BANK CUTS DEPOSIT RATE TO -0.2% FROM -0.05%

The immediate reaction was DKK weakness, but that has been completely unwound and follows worrying reassurances this week from Oestergaard that "Denmark's Krone peg to the Euro is secure."

As Bloomberg reports,

Denmark cut its deposit rate to defend the nation’s currency peg after the Swiss National Bank unexpectedly abandoned the franc’s cap to the euro last week.

 

The central bank in Copenhagen lowered its deposit rate to minus 0.2 percent from minus 0.05 percent, according to a statement today. The lending rate was cut to 0.05 percent from 0.2 percent.

 

The move comes amid speculation that Denmark could be forced to follow Switzerland, which had spent the last three years struggling to buy enough euros to support its exchange-rate regime. Denmark has maintained its currency peg for three decades. Its foreign reserves rose to 446.8 billion kroner ($69.9 billion) last month, compared with a high of 514.4 billion kroner in 2012.

EURDKK at near-10 year highs...

 

Well that didn't last long...

 

And one final reminder: Danish households debt 321% of disposable income - OECD

*  *  *

And you know they are in trouble when the denials start... 

  • *DANISH CENTRAL BANK SPOKESMAN BILTOFT COMMENTS VIA PHONE
  • *DANISH PEG WAS AFFECTED BY SNB DECISION, BILTOFT SAYS
  • *DENMARK HAS `NECESSARY TOOLS' TO MAINTAIN PEG, BILTOFT SAYS
  • *DENMARK HAS NO PLANS TO DROP EURDKK PEG, BILTOFT SAYS
  • *DENMARK CAN'T BE COMPARED WITH SWITZERLAND: BILTOFT
  • *DENMARK HAD INTERVENED `FOR LITTLE WHILE' BEFORE CUTS: BILTOFT

Remember what the SNB said about "surprises"

 

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Mon, 01/19/2015 - 11:18 | 5679507 Motorhead
Motorhead's picture

Danish cheese, bitchez!

Mon, 01/19/2015 - 11:24 | 5679528 Colonel Klink
Colonel Klink's picture

Cheesy Danish sounds more like it.

Mon, 01/19/2015 - 11:37 | 5679574 SumTing Wong
SumTing Wong's picture

I kept reading Biltoft and thought I was reading, "liftoff." Maybe Rickards had a point with his book...

Mon, 01/19/2015 - 11:48 | 5679605 BaBaBouy
BaBaBouy's picture

THINGS Are Getting Rough...Keynesian Fiats currency WARS Are On, Boitchez...
Phys GOLD $3K In The Cards...

Mon, 01/19/2015 - 11:48 | 5679614 kliguy38
kliguy38's picture

30K and you're getting warmer

Mon, 01/19/2015 - 12:27 | 5679747 Soul Glow
Soul Glow's picture

Don't tell Krugman.

Mon, 01/19/2015 - 12:05 | 5679671 franzpick
franzpick's picture

THE DANSE MACABRE OF THE CURRENCIES HAS BEGUN, AGAIN.

Is Brussels burning?

Mon, 01/19/2015 - 12:08 | 5679680 Ghordius
Ghordius's picture

you mean Frankfurt, not Brussels

Mon, 01/19/2015 - 12:27 | 5679742 NoDebt
NoDebt's picture

What's the order of things again?  Trade wars, then currency wars then shooting wars?

 

Mon, 01/19/2015 - 12:27 | 5679754 quasimodo
quasimodo's picture

Nah, I heard all three at one time. They want to keep us on our toes.

Mon, 01/19/2015 - 13:44 | 5679959 KnuckleDragger-X
KnuckleDragger-X's picture

The sheep must be sheared and they don't get a say in their haircut. It going to come down to how far they can push before they radicalize their populations and this little social experiment won't end well.

Mon, 01/19/2015 - 12:46 | 5679849 Goldy Locks
Goldy Locks's picture

Gold $3k because the dollar will be 0.4 against CHF. Doesn't mean a thing. We have to stop pricing PMs against dollars.

Mon, 01/19/2015 - 23:15 | 5682454 Crash Overide
Crash Overide's picture

Colonel Klink

"Cheesy Danish sounds more like it."

Like FX market is to currency I had one for breakfast... a cheese danish that is.

 

Next up...?

Mon, 01/19/2015 - 11:25 | 5679532 StateofFraud
StateofFraud's picture

First it was a race *to* the bottom. Now it's a race *through* the bottom. Let's hope our overlords dont' really think they can keep digging and pop up happily in China, 'cause one way or another, there are pitchforks in their future...

Mon, 01/19/2015 - 11:35 | 5679569 RaceToTheBottom
RaceToTheBottom's picture

So true, the outcome of the racetothebottom is a new definition of bottom.

Mon, 01/19/2015 - 13:10 | 5679967 KnuckleDragger-X
KnuckleDragger-X's picture

Just remember, gravity always wins and that sudden stop at the end is gonna hurt...

Mon, 01/19/2015 - 11:33 | 5679561 BandGap
BandGap's picture

If it ain't Dutch, it ain't much!

 

Mon, 01/19/2015 - 11:47 | 5679604 pods
pods's picture

They make one hell of an oven.

pods

Mon, 01/19/2015 - 11:55 | 5679631 BandGap
BandGap's picture

The Dutch actually ruled the world at one point. Extremely industrious people.

If you ask a Dutch what their biggest export is they will tell you it's Dutch people.

Mon, 01/19/2015 - 12:07 | 5679675 Ghordius
Ghordius's picture

but then the English tricked the Dutch and stole their King. just after the Dutch farmers found a way to breed orange carrots in honour of the Royal House

Mon, 01/19/2015 - 12:33 | 5679779 Uchtdorf
Uchtdorf's picture

Too picky?

Dutch = Holland = Modern The Netherlands

Danes = Denmark

Mon, 01/19/2015 - 12:53 | 5679891 shovelhead
shovelhead's picture

Right up the street.

Close enough.

Mon, 01/19/2015 - 13:20 | 5680008 Uchtdorf
Uchtdorf's picture

Thanks for the geography lesson. Winning!

Mon, 01/19/2015 - 12:43 | 5679837 logicalman
logicalman's picture

Take a look at William of Orange - Bank of England - Darien Project and The Act of Union.

Interesting stuff.

Mon, 01/19/2015 - 12:21 | 5679719 roadhazard
roadhazard's picture

And exterior doors.

Mon, 01/19/2015 - 19:11 | 5681509 WmMcK
WmMcK's picture

And some good apple pies.  My uncle told me that.

Mon, 01/19/2015 - 12:40 | 5679822 quasimodo
quasimodo's picture

I live in a VERY heavily populated Dutch area, all of whom can trace roots back to the Netherlands. Here the saying is "If you ain't Dutch you ain't much"

Yes they are a very industrious folk, quite generous and hard working. Here most come from some branch of the Reformed church or similar offshoot. Most will give you the shirt off thier back or food off thier table in time of need. They also like thier names on certain halls and dormitories at the local private colleges when they give a large amount, even though they will at first act all humble and tell you "we could never have our name on XXX or YYY". Dutch Bingo is an everyday occurence here. 

They are also as stubborn as the day can be long, and at times very obstinate. I should know, I married a Dutch girl, and I have zero Dutch in me. The big joke sometimes is why my name does not end in a Vande, or Vander or Van etc.

Mon, 01/19/2015 - 15:04 | 5680475 ZH Snob
ZH Snob's picture

...and the rats go cannibal!

Mon, 01/19/2015 - 11:19 | 5679511 Uncertain T
Uncertain T's picture

The peg to the euro will be secure... Until it isn't.

Mon, 01/19/2015 - 11:38 | 5679575 Dollarmedes
Dollarmedes's picture

And what did that take for SNB, about 5 days? LOL

Mon, 01/19/2015 - 14:54 | 5680430 RichardParker
RichardParker's picture

Holding the peg will probably do wonders for their housiing bubble.

http://www.bloomberg.com/news/2014-08-21/danish-apartments-beating-house...

(sarc)

Mon, 01/19/2015 - 15:46 | 5680635 ThroxxOfVron
ThroxxOfVron's picture

"The peg to the euro will be secure... Until it isn't. "

There is a lot of blood in the water right now.

The Spculators got burned pretty nastily and will be looking to recover some of their losses on the next levered gamble as well as take their anger out on someone.

This is gonna get a lat uglier -and in a hurry...

Mon, 01/19/2015 - 11:20 | 5679515 Jethro
Jethro's picture

I liked the Danes (and the rest of the Scandinavians) more when they were Vikings. 

Mon, 01/19/2015 - 11:40 | 5679587 pods
pods's picture

There still are some Great Danes.

Okay, that was bad.

<junk>

Mon, 01/19/2015 - 12:34 | 5679787 BandGap
BandGap's picture

Vikings never won the big one.

Mon, 01/19/2015 - 13:00 | 5679922 Svendblaaskaeg
Svendblaaskaeg's picture

We pillaged and looted some folks...

Mon, 01/19/2015 - 19:09 | 5681504 WmMcK
WmMcK's picture

Fran the Man

Mon, 01/19/2015 - 12:42 | 5679832 shovelhead
shovelhead's picture

At least they made an honest living with broadswords and axes.

Now they're just...squishy.

And the Muslims do the invading and raping.


Mon, 01/19/2015 - 11:21 | 5679518 IridiumRebel
IridiumRebel's picture

We NIRP'd some folks....

Mon, 01/19/2015 - 12:01 | 5679655 NoTTD
NoTTD's picture

"I know some people who know some people who nirp some people."

Mon, 01/19/2015 - 11:23 | 5679520 Colonel Klink
Colonel Klink's picture

This time is different!  Reassurance from the central bank regarding a Krone-yism.

Mon, 01/19/2015 - 11:58 | 5679638 MarketAnarchist
MarketAnarchist's picture

Ah! I see what you did there...

Mon, 01/19/2015 - 11:23 | 5679523 SpanishGoop
SpanishGoop's picture

"secure", "for sure".

I just heard that from the SNB two weeks ago.

 

Mon, 01/19/2015 - 11:27 | 5679533 firstdivision
firstdivision's picture

Have no fear, Draghi is claiming half a trillion euros will fall out of helicopters stationed above 10 Paternoster Square, Place de la Bourse, Bourse Square, and 60485 Frankfurt am Main

Mon, 01/19/2015 - 11:28 | 5679538 livestrong
livestrong's picture

The way things are going, within a few years we'll have average bank rates of -99.9%.  These banks will be big black holes that suck everyone's money in, and nothing comes out.  

The death of money.

Mon, 01/19/2015 - 11:36 | 5679571 game theory
game theory's picture

The money WILL come out....only in the pockets of the bankers and executives. 

Mon, 01/19/2015 - 11:48 | 5679610 IridiumRebel
IridiumRebel's picture

...and personal safes holding PMs.

Mon, 01/19/2015 - 11:28 | 5679539 holgerdanske
holgerdanske's picture

Danish pastry is called "Danish" in most of the English speaking world. But in Denmark it is called "Wienerbroed" or "Bread from Vienna".

Just a nice to know for those quiz evenings!

 

And yes, Danish cheese is good.

 

And that peg will not hold, if we all bet against it.!

Neither will the other fiat currencies, given time.

Whale oil beef hooked!

Mon, 01/19/2015 - 11:34 | 5679563 Pool Shark
Pool Shark's picture

 

 

And, JFK was a Jelly Doughnut...

"Ich bin ein Berliner"

http://en.wikipedia.org/wiki/Ich_bin_ein_Berliner

 

[Well, kinda...]

Mon, 01/19/2015 - 14:45 | 5680382 samjam7
samjam7's picture

I think if SNB couldn't hold it then the Danish Bank can do so even less, considering the size of the economy...

Then again, 'can' may be the wrong verb, it should be 'want'. The Swiss could have kept it if they had truly wanted it's just a question of what it takes to be fed up and call it a day. The danes being in the EU and having a Peg for longer than the Swiss floor may well be willing to hang in there longer.

Plus the Danish Kronor doesn't compare to the Swiss franc when it comes to safe haven status so their inflows are a lot lower as well..

Mon, 01/19/2015 - 11:28 | 5679543 Never One Roach
Never One Roach's picture

Deflationary Depression getting worse. Luckily, "it's contained."

Mon, 01/19/2015 - 11:46 | 5679600 pods
pods's picture

This collapse is getting so contained that it is going to go quasar pretty soon.

pods

Mon, 01/19/2015 - 11:39 | 5679584 Seasmoke
Seasmoke's picture

What is # X ZIRP ????

Mon, 01/19/2015 - 11:43 | 5679591 yogibear
yogibear's picture

It eventually breaks down when they all start to see the inevitable endgame. 

The countries that get out first will probably survive the Ponzi mess the best.

The US Federal Reserve said this is all uncharted territory for them.

All of you Euro-fools that want to follow Yellen and the Fed off the cliff go ahead.  

 

Mon, 01/19/2015 - 12:40 | 5679818 They Tried to S...
They Tried to Steal My Gold's picture

"All of you Euro-fools that want to follow Yellen and the Fed off the cliff go ahead. ...." 

 

Near Perfection....

 

Insert "and you Dollar fools"

 

Perfection

Mon, 01/19/2015 - 11:44 | 5679593 jldpc
jldpc's picture

Take a step back and look. If every non E6 country wants to keep its local currency low, and thus forces local savers out of their own country's deposit accounts (banks), what happens to the Euro - if they choose that alternative to hold their cash, it stays the same or goes higher and the ECB MUST react, but how over German objection to buying debt-brother low-life debt ridden CB paper- at the central level? For the northern non-debt-bro's this is golden; for the southern debt-bro's this is lunacy. Their "local" currency goes lower and all of them must work harder and longer to earn enough to stay alive. HA! They have neverand will never do that!

Mon, 01/19/2015 - 11:44 | 5679595 Racer
Racer's picture

worrying reassurances

 

Haha

Mon, 01/19/2015 - 11:46 | 5679603 Kaiser Sousa
Kaiser Sousa's picture

Silver at 17 and change...?

laughing all the way to my LCD...

DEATH TO THE MONEYCHANGERS.

Mon, 01/19/2015 - 11:48 | 5679612 Catullus
Catullus's picture

Because every other currency peg in history hasn't failed.

Mon, 01/19/2015 - 11:48 | 5679613 Bill of Rights
Bill of Rights's picture

Bank runs on the euro in 5,4,3....

Mon, 01/19/2015 - 11:53 | 5679627 papaswamp
papaswamp's picture

speaking of sushi... Anyone notice the Japan 10yr? 5 yr already at zero with negative tendancies.

Mon, 01/19/2015 - 11:55 | 5679634 numapepi
numapepi's picture

The one plan of the elite, if destroying our wealth through currency devaluation doesn't work, is to steal our wealth through financial repression and outright theft via negative interest rates.

What the elite seem to forget is that, for now, we can buy real assets that don't pay negative interest rates and are a form of currency that is much harder to manipulate... gold and silver.

Mon, 01/19/2015 - 12:03 | 5679658 Fun Facts
Fun Facts's picture

“The minimum exchange rate remains for the foreseeable future the key monetary policy instrument.

We’re prepared to buy unlimited amounts of foreign currencies and, if necessary, take further measures …. We will continue to defend the minimum exchange rate with utmost determination …”
— Thomas Jordan, President of the Swiss National Bank, 23 September 2014 — Speech in defense of the 1.20 peg to the Euro set in September 2011

So just change the name to Nationalbanken.

It's going to be raining pegs soon.

Mon, 01/19/2015 - 12:03 | 5679659 NoTTD
NoTTD's picture

Better to wake up a Swiss this morning than a Dane.

Mon, 01/19/2015 - 12:06 | 5679667 Rusty Trombone
Rusty Trombone's picture

We dry ass fucked some folks.....

Mon, 01/19/2015 - 12:05 | 5679670 Soul Glow
Soul Glow's picture

So holding cash will lose purchasing power to inflation and lose interest whilest one waits.  Good thing you can eat fiat.

Mon, 01/19/2015 - 12:10 | 5679685 gatorengineer
gatorengineer's picture

When Draghi disappoints, look to see north of 1.20 again....  Whole lots of Euro shorts...  Of course if he somehow comes out with 1.5T or more well then I am wrong.

Mon, 01/19/2015 - 12:36 | 5679796 shovelhead
shovelhead's picture

*DENMARK HAS NO PLANS TO DROP EURDKK PEG, BILTOFT SAYS

The denial is official.

You know what that means...

Mon, 01/19/2015 - 12:39 | 5679806 KingFiat
KingFiat's picture

Actually it is not the deposit rate that became negative; the deposit rate is still zero. What became (more) negative was the rate on "indskudsbeviser" (ultra-short 3-days obligations), which was lowered from -0,05 to -0,20 percent.

To defend the EURDKK peg there is a limit on deposits in the Danish National Bank (DNB). Amounts deposited there above this limit are automatically converted to "indskudsbeviser".

Having followed Danish monetary policy for decades, I find it extremely unlikely that the peg will be abandoned. It has been in place since the Euro started, and even before then there was another similar peg. There is even a binding agreeement between DNB and ECB that both parties must defend this peg.

And politically it is unthinkable to abandon the peg: The vast majority of politicians in the Danish Parliament want Denmark to join the Euro, but this cannot legally be done without a popular vote. There have been several such popular votes, and the outcome of all of them was to keep DKK. Having this peg, with a binding agreement to keep it, is the closest the the danish politicians can get to joining the Euro.

The only way I see the the EURDKK peg abandoned is if Germany leaves the Euro. In that case the EURDKK peg would likely be abandoned in favour of a peg to whatever currency Germany adopts.

Mon, 01/19/2015 - 15:59 | 5680700 KingFiat
KingFiat's picture

Interest rate changes from the Danish National Bank like this are unusual. This change was on a Monday, and usually they change rates on Thursdays. And usually they change rates in smaller steps of 0,1 percent, but this time they changed the rate by 0,15 percent. The local Danish financial press is expecting this rate to be changed down another 0,1 or 0,15 percent again on Thursday.

Given the very close cooperation between the Danish National Bank and ECB I see this unusual rate lowering as an indication DKK may come under more pressure later this week, probably because ECB is going to engage in QE.

And after finding the English language version of their press release, I see why some misunderstood and thought it was the deposit rate that went even more negative: Deposits they call "current account" in English. And "certificates of deposit" ("indskudsbeviser" in Danish) are actually very short-time (3 days) bonds issued by the Danish National Bank.

Mon, 01/19/2015 - 12:51 | 5679878 damicol
damicol's picture

There is this notion that every one seems to have,, no doubt because they listen to the MSM the nice honest politicians and the bankers and hedgies who are all telling you that the incomparably evil fuck witted criminal cock sucker druggy draggy will do, when every one knows for a fact these cunts couldn't tell the truth for one second.

If you stop and think just for a second, it seems far more likely that the cunt draggy i NOT going to be doing his fucking fraudulent ponzi scam QE.

Why ?    Because a certain Mr Weiderman says he is not. Not without major consequences, Like Germany telling the whole of the rest of Europe to go fuck themselves with whatever blunt or sharp object bigger than a dwarf is at hand.

So Why did SNB drop the cap, Because historically the Franc and the Deutschmark  were very close, very strong and and very close, and Mr Wiederman whispering in the SNB ear  that the showdown was coming and there wasn't a fucking hope in hell of a cock sucking third rate jumped up shit for brains like draggy winning.

Not ever, even  with all the fucking spin and drivel and  goading from all his criminal mafia  fuck buddies  around the world.

Draggy might have  been sucking cock on a herculean scale, but Mr Weiderman knows exactly what a shithole draggy is and the depths of his depravity.

And Mr Weiderman knows exactly whose cocks has draggy pig lipstick rings around them.

As we all do.  Every lying  thieving desperate arsehole you can think of. Like the brain dead faggot Holland  who actually announced it was going to happen.

I do not buy it. Mr Weiderman is not for bending over for a cunt like draggy to ass rape him and neither are the Swiss.

No the Swiss pulled out and the Danes will do the same before the week is out  precisely because it is a simple  choice.

Draggy fucks off, and there is no QE and gets shafted in every which way by his fuck buddies for letting them down, or Germany pulls out and leaves draggy and the rest of the corrupt lying fucks looking like a bunch of fucking dumb morons with a printing press and no fucking currency worth more than a Zimbabwe dollar to print.

Bear in mind that there is not a single German Bank that does not have enough freshly printed marks waiting patiently in the vaults to replace every single  fake ponzi euro voucher in  a matter of minutes.

Every ATM is pre-programmed to be capable of switching instantly in Germany.

Short the fucking  ponzi toilet paper called the euro like there is no tomorrow by going long rubles.

Germany will not volunteer to take on the debts of Europe.

Mon, 01/19/2015 - 12:53 | 5679889 GMadScientist
GMadScientist's picture

4X from Forex. Not ones for subtlety those Hamlets.

Mon, 01/19/2015 - 13:36 | 5680078 robertocarlos
robertocarlos's picture

They are always sticking their finger in some dike.

Mon, 01/19/2015 - 14:05 | 5680204 Bunga Bunga
Bunga Bunga's picture

THIS TIME IT'S DIFFERENT

Mon, 01/19/2015 - 14:16 | 5680261 disabledvet
disabledvet's picture

This could be what collapses the euro.

"The debt is free because the money is worthless.". You can get 17% on ruble denomninated debt...but no one is buying.

Mon, 01/19/2015 - 15:23 | 5680539 rejected
rejected's picture

Yea, but solvent Russia is rated junk while insolvent U.S and E.U are Triple AAA.

See how that works?

Tue, 01/20/2015 - 07:42 | 5683070 dreadnaught
dreadnaught's picture

funny how that works- USA is $20 TRILLION in debt, while RUSSIA is only $675 BILLION in debt-practically a rounding error

Mon, 01/19/2015 - 14:24 | 5680292 Jack Burton
Jack Burton's picture

If Denmark is feeling the heat, Sweden must not be far behind. An EU member on the fringes, not all in to the Euro, thank god. I have family members there who fight politically to exit all EU ties, but big business and bankers hold more power than farmers, shop keepers and industrial managers I guess!

Mon, 01/19/2015 - 16:00 | 5680707 GMadScientist
GMadScientist's picture

Exactly. Isn't this the entire problem with an 'alloy' of AAA countries mixed with contaminants from the south trying to use a common currency?

Indeed. This about how the state oil profits get invested (another reason they'll be drinking heavily in the near future).

Mon, 01/19/2015 - 15:02 | 5680467 cjt
cjt's picture

"Denmark has maintained its currency peg for three decades."  Really???  The Euro is only 13 years old!

Mon, 01/19/2015 - 16:03 | 5680717 GMadScientist
GMadScientist's picture

They've been pegged to the Reichsmark and the Pound in the past.

Mon, 01/19/2015 - 16:34 | 5680849 Clowns on Acid
Clowns on Acid's picture

So once the Swedes go ZIRP, the only non Zirp currency will be the Ruble. That could a nice 7% return for 1 year with an appreciating currency. Te actual yield could be 15 to 30%. 

Of course I would have to connect to the new Russian version of SWIFT (SWIFTOVSKY) for settlement ... but...so what.   

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