Denmark’s Danmarks Nationalbank moved to support the krone after the currency slid to its weakest level against the euro since the late 1990s, triggering the kind of intervention the bank hadn’t needed to deploy since December 2022.
The Danish krone has been pegged to the euro since January 1, 1999, at a central rate of 7.46038 DKK per euro, with an official fluctuation band of plus or minus 2.25%. In practice, Danish authorities keep things far tighter, typically within 0.5% of that central rate.
How the peg works, and why it usually doesn’t make news
The mechanism is the European Union’s Exchange Rate Mechanism II, known as ERM II. Denmark joined when the euro launched and has maintained the arrangement ever since, despite never adopting the euro itself.
In recent years, the krone’s rate has typically fluctuated within about 0.4% on the downside and 0.2% on the upside from the central rate. The central bank’s last net foreign exchange interventions on record came in December 2022. The roughly three-and-a-half years of quiet that followed makes this episode more striking by comparison.
