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Danish Central Bank Just Cut Rates For A Second Time This Week; Intervenes In Market To Preserve Peg

Tyler Durden's picture




 

It was just on Monday when the Danish central bank, clearly panicking about the peg of the Danish Krone to the EUR, surprised the world when in an unexpected rate cut it went NIRPer, sending its deposit rate from -0.05% to 0.2%. Moments ago it doubled down with its second rate cut for the week, this time sending the rate from -0.20% to -0.35%. At this rate we should hit -0.5% next Tuesday and be well into the -1% territory two weeks from today. And not only that, but as Bloomberg observes, "The Danish central bank “also seems to have been intervening in the market prior to the ECB meeting,” Jes Asmussen, chief economist at Svenska Handelsbanken AB in Copenhagen." In other words, the Danish Krone's peg days are most likely numbered.

From Bloomberg:

Governor Lars Rohde delivered his second rate cut in less than a week today, lowering the deposit rate by 15 basis points to minus 0.35 percent. The move follows a 15 basis-point cut on Monday and comes as the European Central Bank unveils an historic bond-purchase program.

 

The Danish central bank “also seems to have been intervening in the market prior to the ECB meeting,” Jes Asmussen, chief economist at Svenska Handelsbanken AB in Copenhagen, said by phone. “Whether there’ll be further pressure for the krone to appreciate after the rate cut remains to be seen.”

And from the source:

Effective from 23 January 2015, Danmarks Nationalbank's interest rate on certificates of deposit is reduced by 0.15 percentage point. The lending rate, discount rate and the current account rate are unchanged.

 

The interest rate reduction follows Danmarks Nationalbank's purchase of foreign exchange in the market.

 

Danmarks Nationalbank's interest rates are:

 

Lending rate: 0.05 per cent

 

Certificate of deposit rate: -0.35 per cent

 

Current account rate: 0.00 per cent

 

Discount rate: 0.00 per cent

2015: the year currency wars got real.

*  *  *

So far things aren't working out so well...

 

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Thu, 01/22/2015 - 11:15 | 5692248 skbull44
skbull44's picture

And control slips away...

http://olduvai.ca

Thu, 01/22/2015 - 11:17 | 5692263 kliguy38
kliguy38's picture

Queue up the next "surprise unpeg"

Thu, 01/22/2015 - 11:17 | 5692272 PartysOver
PartysOver's picture

Yep, the Danes don't have the ammo to fight it.

Thu, 01/22/2015 - 11:19 | 5692280 Haus-Targaryen
Haus-Targaryen's picture

How are the leverged?  

I mean -- apart from cutting rates every month for the next 16 months, I don't think they can create so much cash to dissipate the flight to safety.  The EMZ is so much larger than little denmark.  Shoot, Dutch funds could overwhelm the Danish system alone.  

They are next.  

Thu, 01/22/2015 - 11:22 | 5692300 Publicus
Publicus's picture

KING DOLLAR

Thu, 01/22/2015 - 11:29 | 5692321 SickDollar
SickDollar's picture

And so the Euro is also now to be admitted into intensive care, to join the dollar and sterling. To kick start the ailing EU economy ? Really ? All it's going to do is add another €1.14 trillion of mis-allocated capital; which will only end up impoverishing even more of the struggling EU population. And fill up the ECB's balance sheet with even more un-collatarised debt

Thu, 01/22/2015 - 11:58 | 5692428 RaceToTheBottom
RaceToTheBottom's picture

Japan is catatonic on the gurney but has been moved into the hallway to give room for the Euro.

Thu, 01/22/2015 - 12:04 | 5692446 SWRichmond
SWRichmond's picture

It is plain to see that the control freaks are running the show (at least they think they are...).

When some degree of "control" is ineffective, the only choice available is to apply still more "control".  Failing to apply more "control" would be to admit they cannot control, which is an impossible world view to them.

They will never be found wanting for justifications for their control efforts; they do it "to maintain stability", to "foster economic growth", to "help alleviate joblessness", but we know that really they just need to be in "control".  The notion of genuine free men and free markets terrifies them.

 

Thu, 01/22/2015 - 12:53 | 5692649 SamAdams
SamAdams's picture

Martin Armstrong and Socrates called this a few days ago.

Thu, 01/22/2015 - 13:09 | 5692710 KnuckleDragger-X
KnuckleDragger-X's picture

I see the First National Mattress Bank becoming very popular quickly. These big geniuses never take the human factor into account and then wonder where things went wrong.....

Thu, 01/22/2015 - 11:31 | 5692332 Lumberjack
Lumberjack's picture

fuckey sucky for 2 dollah joe... Too bad that means a nickel now.

 

and yes I am drunk. will refrain from posting awhile...

Thu, 01/22/2015 - 12:38 | 5692596 25or6to4
25or6to4's picture

Lumberjack
Damn man, what time zone are you in? Pushing that "is gotta be 5 o'clock somewhere" meme to the max? Good for you.

Thu, 01/22/2015 - 11:21 | 5692294 Killtruck
Killtruck's picture

So why aren't people taking out a second mortgage on the McMansion and buying a shitload of kroner to catch the 'surprise" unpegging?

Thu, 01/22/2015 - 11:26 | 5692311 Timmay
Timmay's picture

Hope.

Thu, 01/22/2015 - 11:18 | 5692275 Haus-Targaryen
Haus-Targaryen's picture

Danish are next to surrender.  

Good for the Danish.  

Thu, 01/22/2015 - 12:37 | 5692593 Stuck on Zero
Stuck on Zero's picture

We're seeing Gresham's law in action.  Cheap, unbacked fiat currencies go into circulation and the good currencies are horded.

Thu, 01/22/2015 - 13:33 | 5692802 PrecipiceWatching
PrecipiceWatching's picture

Hmmmmmmm.

 

So why is my Merk Hard Currency Fund in the toilet?

Thu, 01/22/2015 - 11:16 | 5692256 TabakLover
TabakLover's picture

No boner for the kroner.....

Thu, 01/22/2015 - 11:28 | 5692317 Spitzer
Spitzer's picture

haha

First the Canadians, now the Danes. Doesn't much matter. Everyone is taking orders from Washington.

Thu, 01/22/2015 - 11:17 | 5692259 SHEEPFUKKER
SHEEPFUKKER's picture

NIRP me once, shame on.....

NIRP me a million times......

Thu, 01/22/2015 - 11:17 | 5692260 medium giraffe
medium giraffe's picture

looks healthy...

Thu, 01/22/2015 - 11:46 | 5692377 BandGap
BandGap's picture

https://www.youtube.com/watch?v=cdOGPBnfoKE

 

Small signs before a rupture

Thu, 01/22/2015 - 11:18 | 5692266 Fun Facts
Fun Facts's picture

new krone zone coming

Thu, 01/22/2015 - 11:17 | 5692273 GMadScientist
GMadScientist's picture

As we'll be seeing this alot, I expect we should give it a name:

The Kroner Boner.

Thu, 01/22/2015 - 11:20 | 5692277 CNBCrap
Thu, 01/22/2015 - 11:18 | 5692278 hendrik1730
hendrik1730's picture

How come there are no bank runs in Denmark? What moron leaves his money in the bank at a rate of MINUS 0.35%????

Thu, 01/22/2015 - 11:36 | 5692350 Alea Iactaest
Alea Iactaest's picture

It's getting more expensive to be a paper bug.

Thu, 01/22/2015 - 11:21 | 5692283 surf0766
surf0766's picture

And it's gone... Down 21 K

 

Thu, 01/22/2015 - 11:24 | 5692296 Dr. Engali
Dr. Engali's picture

Keep printing moar, it's clearly working. People are paying for the privilege to lend their "money" out so other people...... ahem.....bankers.....can spend it. 

Thu, 01/22/2015 - 11:23 | 5692297 IronShield
IronShield's picture

Wow, with all these GLOBAL adjustments going on guess things ain't as perty as they describe?  Rose-colored glasses under serious stress!

Thu, 01/22/2015 - 11:24 | 5692305 JRobby
JRobby's picture

They have lost it. Diving with the swiss. More to follow.

Thu, 01/22/2015 - 11:24 | 5692306 youngman
youngman's picture

every action has a reaction..this is the war of the Central banks...

Thu, 01/22/2015 - 11:28 | 5692315 MonetaryApostate
MonetaryApostate's picture

I'm sad to see that now the European empire most likely will soon be coming to an end after so many brutal centuries...

Thu, 01/22/2015 - 11:27 | 5692316 pods
pods's picture

Cracks in the dike.  Man this whole shitpile is about to break loose.

We are actually at a time in history when cutting rates equals making deposit rates MORE NEGATIVE.

Ponder that one.  They charge us to create and use their funny money, and now they are charging us to "hold" it.

pods

Down with ODD since 2008.

Thu, 01/22/2015 - 11:30 | 5692323 MonetaryApostate
MonetaryApostate's picture

Like Max Keiser said, you can't taper a ponzi scheme, they can't raise rates, and they can't stop printing!

Thu, 01/22/2015 - 11:31 | 5692330 pods
pods's picture

Hopefully we are in the Vinegar Strokes of fractional reserve banking.

pods

Thu, 01/22/2015 - 11:28 | 5692325 Panic Mode
Panic Mode's picture

So lighting does strike twice. We still got tomorrow, can be 3rd time lucky.

Thu, 01/22/2015 - 11:29 | 5692329 MonetaryApostate
MonetaryApostate's picture

Buy the dips to infinity!!!!

Thu, 01/22/2015 - 11:36 | 5692333 shanearthur
shanearthur's picture

Central banker: "Hey, we're central banks. We can print money out of thin air. We're banks — the people who naturally should have all the money we need. Our only goal is to have and provide money. Having said that, we're broke as a joke, so we need to take your money through netative rates if you deposit it with us. We simply can't find a way to be profitable, even with our ability to print money out of thin air and charge your broke asses billions in overdraft fees. So whatever you do, don't lose faith in our omnipotence. We've got your back."

Thu, 01/22/2015 - 12:59 | 5692669 bluskyes
bluskyes's picture

"We've got your back"

Yeah, I can feel the blade already.

Thu, 01/22/2015 - 11:34 | 5692339 buzzsaw99
buzzsaw99's picture

great dane, huge shit, something something, ha ha ha

Thu, 01/22/2015 - 11:36 | 5692343 Bill of Rights
Bill of Rights's picture

Now all we need is the Chinese to de-peg and this shit gets real....Main street is clueless as to what is taking place.

Thu, 01/22/2015 - 11:49 | 5692385 robertocarlos
robertocarlos's picture

If the Chinese depeg how do you know that their currency doesn't go down in value vis a vis the USD?

Thu, 01/22/2015 - 11:38 | 5692357 Billy Shears
Billy Shears's picture

If the SNB folded it is only a matter of time before the Danes fold.

Thu, 01/22/2015 - 11:50 | 5692394 robertocarlos
robertocarlos's picture

Danes don't fold! They'll split your skull open with a broad-sword and take every ounce of your gold and silver.

Thu, 01/22/2015 - 12:31 | 5692542 roadhazard
roadhazard's picture

We call them Pirates here in the New World.

Thu, 01/22/2015 - 12:02 | 5692442 saldulilem
saldulilem's picture

please excuse a novice who's new to FX etc. but from the chart it seems that DKK is weakening with respect to EUR, so why did they cut rate? shouldn't it be the other way around?

Thu, 01/22/2015 - 13:45 | 5692862 Oldballplayer
Oldballplayer's picture

Wihtout even looking, I think you are expecting the index to move upward from 0 to whatever.  Take look at the index on the chart.  I think its going in a different direction.

Thu, 01/22/2015 - 13:15 | 5692737 Yttrium Gold Ni...
Yttrium Gold Nitrogen's picture

I wonder if those "rounding errors" (we're talking about tenths of a percent here) actually have any measurable impact. Do they do it to induce placebo effect?

Thu, 01/22/2015 - 13:49 | 5692873 NoTTD
NoTTD's picture

I've just moved the DKK slightly ahead of the HKD on my Big Board of Unpegging.

Thu, 01/22/2015 - 15:05 | 5693167 prudent_investor
prudent_investor's picture

Looks like competition between CBs - who can print more money in shortest time period:) It will ends very badly... for sure...the problem is none knows when!!! Who knows????

http://prudentvalueinvestor.blogspot.com/2015/01/risk-management-part-1....

 

 

 

Thu, 01/22/2015 - 16:26 | 5693532 Jano
Jano's picture

Denmark are 6M people. Very small country and small economy.

Soros can break them whenever he will wish to destroy D-Krone.

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