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Danish central bank cuts deposit rate to negative territory

Xinhua, February 6, 2015 Adjust font size:

Denmark's central bank cut its interest rates on certificates of deposit by 25 basis points to -0.75 percent on Thursday.

"Effective from Feb. 6, 2015, Danmarks Nationalbank's interest rate on certificates of deposit is reduced by 0.25 percentage point to minus 0.75 percent," the central bank said in a statement.

"The lending rate, the discount rate and the current account rate remain unchanged at 0.05 percent, 0.0 percent and 0.0 percent, respectively," it added.

The interest rate reduction follows Danmarks Nationalbank's purchase of foreign exchange in the market, the bank said.

Following the decision by the Swiss National Bank to discontinue the minimum exchange rate and the decision by the European Central Bank to launch an expanded asset purchase program, there has been a considerable inflow of foreign currency, according to the bank, noting that measures have been taken to inhibit the inflow of foreign exchange.

Danmarks Nationalbank's interventions in the foreign exchange market amounted to 106.3 billion Danish kroner (16.35 billion U.S. dollars) in January and the rate on certificates of deposit has been lowered several times.

Moreover, Denmark's Ministry of Finance has decided to suspend the issuance of domestic and foreign bonds until further notice, based upon the recommendation of Danmarks Nationalbank.

"There is no upper limit to the size of the foreign exchange reserve," the bank's governor Lars Rohde said in the statement.

He added that the revenue of Danmarks Nationalbank is positively affected by the increase of the foreign exchange reserves.

On Tuesday, Denmark's Prime Minister Helle Thorning-Schmidt expressed confidence that the Danish central bank would be able to defend the krone's peg to the euro. Endit