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Danish Central Bank Just Cut Rates For A Second Time This Week; Intervenes In Market To Preserve Peg
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.
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So far things aren't working out so well...
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And control slips away...
http://olduvai.ca
Queue up the next "surprise unpeg"
Yep, the Danes don't have the ammo to fight it.
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.
KING DOLLAR
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
Japan is catatonic on the gurney but has been moved into the hallway to give room for the Euro.
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.
Martin Armstrong and Socrates called this a few days ago.
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.....
fuckey sucky for 2 dollah joe... Too bad that means a nickel now.
and yes I am drunk. will refrain from posting awhile...
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.
So why aren't people taking out a second mortgage on the McMansion and buying a shitload of kroner to catch the 'surprise" unpegging?
Hope.
Danish are next to surrender.
Good for the Danish.
We're seeing Gresham's law in action. Cheap, unbacked fiat currencies go into circulation and the good currencies are horded.
Hmmmmmmm.
So why is my Merk Hard Currency Fund in the toilet?
No boner for the kroner.....
haha
First the Canadians, now the Danes. Doesn't much matter. Everyone is taking orders from Washington.
NIRP me once, shame on.....
NIRP me a million times......
looks healthy...
https://www.youtube.com/watch?v=cdOGPBnfoKE
Small signs before a rupture
new krone zone coming
As we'll be seeing this alot, I expect we should give it a name:
The Kroner Boner.
https://imgflip.com/i/goxi4
How come there are no bank runs in Denmark? What moron leaves his money in the bank at a rate of MINUS 0.35%????
It's getting more expensive to be a paper bug.
And it's gone... Down 21 K
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.
Wow, with all these GLOBAL adjustments going on guess things ain't as perty as they describe? Rose-colored glasses under serious stress!
They have lost it. Diving with the swiss. More to follow.
every action has a reaction..this is the war of the Central banks...
I'm sad to see that now the European empire most likely will soon be coming to an end after so many brutal centuries...
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.
Like Max Keiser said, you can't taper a ponzi scheme, they can't raise rates, and they can't stop printing!
Hopefully we are in the Vinegar Strokes of fractional reserve banking.
pods
So lighting does strike twice. We still got tomorrow, can be 3rd time lucky.
Buy the dips to infinity!!!!
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."
"We've got your back"
Yeah, I can feel the blade already.
great dane, huge shit, something something, ha ha ha
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.
If the Chinese depeg how do you know that their currency doesn't go down in value vis a vis the USD?
If the SNB folded it is only a matter of time before the Danes fold.
Danes don't fold! They'll split your skull open with a broad-sword and take every ounce of your gold and silver.
We call them Pirates here in the New World.
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?
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.
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?
I've just moved the DKK slightly ahead of the HKD on my Big Board of Unpegging.
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....
Denmark are 6M people. Very small country and small economy.
Soros can break them whenever he will wish to destroy D-Krone.