Denmark’s currency has become one of the hottest currencies in the world, with the Norwegian krone having traded at more than one-third the exchange rate of the Australian dollar.
The exchange rate between the two currencies has been volatile in recent months.
On October 3, the krone lost 5 per cent of its value against the US dollar, then climbed back up to around 6 per cent the next day.
In December, it lost 10 per cent, a level that would put it in a near-death zone.
On Wednesday, Danish authorities announced that it had raised its interest rate from 3 per cent to 5 per 100 Norwegian kroner, but that this had nothing to do with the recent currency turmoil.
Instead, it was a sign of how much Denmark’s economy was in danger of contracting and was now trying to stay afloat.
On Thursday, the Danish Central Bank announced that its decision to keep interest rates unchanged in the near-term was due to the ongoing economic difficulties, while the Bank of Norway said it would continue to maintain a negative interest rate for some time to come.
However, it also noted that the economic situation in Denmark has not yet been fully stabilised, which is why the central bank will keep its rate unchanged until the end of 2019.
This is in line with its stance on the Euro, which has remained at 0.8 per cent since December 1.
Norway’s currency also has its own currency problems, however, as the Norwegiankrone is pegged to the Danish krone, and it is difficult to get an accurate estimate of how the two will perform in the long term.
The Danish government has repeatedly said that it expects the country’s economy to grow between 1 per cent and 1.5 per cent this year, and that the country is “ready to support the country in its recovery”.