Danish Krone Drops After Bets on Euro Peg Breaking Are Reversed
Bloomberg - Feb 20, 2015
The Danish krone weakened as traders scaled back bets the nation would need to abandon its peg to the euro.
The currency slid after a report by Reuters said the central bank was willing to use capital controls if necessary to defend the peg, citing Hans Joergen Whitta-Jacobsen, the head of the Economic Council, an independent body of academics known as the “Wise Men.†In a follow up interview with Bloomberg, Whitta-Jacobsen said he has never advised the government or the central bank to impose capital controls.
The central bank would never unilaterally break the rules that Denmark abides by inside the European Union, he said. The earlier comment to other media was “a way of expressing that the central bank would go very far and do whatever it takes†to save the peg, he said.
The central bank, which has said it will do what is necessary to defend its currency regime, declined to comment on the initial report by Reuters.
