How has the Eurozone debt crisis
affected the Danish krone?

11.09.2024

Peter Lavelle on the Danish krone.

If you plan to visit or emigrate to Denmark, you may be interested to hear how the Eurozone debt crisis has affected the Danish krone in recent years.

Since 1999, the Danish krone has been pegged to the euro, specifically within a 2.25% band.

What that means is that 1.00 euro is fixed at 7.46038 kroner, and the value of the krone can only fluctuate 2.25% above or below that.

The peg is maintained by Denmark’s central bank, Danmarks Nationalbank, as part of ERM-II (Exchange Rate Mechanism II.)

For instance, in May this year the krone hit a 12-month low against the euro of 7.4303, as the Danmarks Nationalbank cut interest rates. Today though, the krone stands at a 12-month high against the euro of 7.4519.

In the case of most currencies that might indicate a substantial change. Yet, with the krone to euro, it’s a movement of just +0.289%. Hence, the euro to krone exchange rate is stable, as I mention.

In other words, if you want to journey from the Eurozone to Denmark, either for a holiday or because you’re emigrating, you don’t have to worry about waiting for the best exchange rate. It won’t change.

However, it’s a different story if you’re coming to Denmark from other countries. In the past 12 months, the pound and US dollar have both gained against the krone, as the Eurozone crisis drags the euro down, and the krone with it because of its peg.

Hence, in the last 12 months the UK pound has climbed from a low of 8.4505 kroner to a 9.5628 high six weeks ago. That’s a 13.163% jump, and closely mimics the rise in the pound against the euro.

It’s a similar story with the US dollar, climbing from 5.252 against the krone last October to 5.8366 today, an 11.131% rise.

In short, though Denmark’s economy has little in common with the Eurozone (it is, for instance, just one of seven countries rated AAA stable by all three global rating agencies) the krone has fallen against the pound and US dollar. This is because it is pegged to the euro.

Hence, this is advantageous if you plan to travel or emigrate to Denmark from the UK or United States.

Meanwhile, if we were to speculate about the krone exchange rate going forward, we should look not at Denmark’s economy, but the situation in Europe.

For instance, the European Central Bank’s recent announcement of a tool to end the debt crisis has helped the euro, and could continue to do so in the future.

That could see the krone strengthening on the foreign exchange market in coming weeks too.

Find Out More

To get an exchange rate guaranteed to beat your bank when you buy Danish kroner, visit us at foreign exchange specialist Pure FX.

Return to the main danish krone currency page.