* Denmark's central bank increase rate on certificates of
* Rate move ends negative deposit rate regime
(Adds details, analyst comments)
By Ole Mikkelsen
COPENHAGEN, April 24 The Danish central bank on
Thursday lifted its rates on certificates of deposit into
positive territory for the first time since mid-2012, boosting
the crown against the euro.
It lifted the rate by 15 basis points to 0.05 percent.
The Nationalbank, whose policy cornerstone is to keep the
local currency steady within a narrow band against the euro,
kept the lending rate, the discount rate and the current account
"The short term rates in the euro area which are higher than
the equivalent Danish rates have increased. This increase has
tended to weaken the Danish crown," the central bank said in a
The crown rose to a five-week high against the
euro after the rate rise, with the latter falling to a low of
7.4628, its lowest level since March 17.
The central bank aims to keep the crown trading close to
rate of 7.46038 against the euro.
"We think that the downward pressure on the (crown) should
now abate," said Jessica Hinds, European economist at Capital
Economics in London.
Nationalbank introduced a negative secondary rate for the
first time in its history when it cut the deposit rate by 25
basis points to minus 0.20 percent in July 2012, when investors
fearful of more turmoil in the euro zone were piling into
Denmark tracked European Central Bank rates consistently
until market concerns about tensions in the euro zone ratcheted
up towards the middle of 2012.
"The move reflects the fact that we are heading towards a
normalisation of both Danish and international economics, which
basically is a sign that we are going to put the crisis behind
us," economist Peter Bojsen Jakobsen from Sydbank wrote in a
note to clients.
Hinds, from Capital Economics, said the bank would be
prepared to intervene for longer and hold fire on an independent
rate rise given the strong chance that the European Central Bank
will loosen monetary policy further.
"However, it seems that the ECB did not act quickly enough
for the Nationalbank's liking," she wrote in a note to clients.
Following the return to a positive interest rate, the
monetary counterparties' current-account ceiling will be reduced
to 38.5 billion Danish crowns ($7.13 billion) from 67.4 billion
The ceiling was raised in effort to reduce the commercial
banks costs for excess liquidity which is placed in the central
($1 = 5.3989 Danish Crowns)
(Editing by Jeremy Gaunt)