Denmark cuts interest rates to defend krone against euro weakness

Denmark redoubled efforts to weaken the krone on Thursday as its long-standing peg with the euro came under pressure from the European Central Bank’s move to unleash a €60bn-a-month stimulus programme on the ailing eurozone.

The Danish central bank cut interest rates for the second time in a week on Thursday afternoon, having already intervened in the currency markets to weaken the krone.

It cut its deposit rate by 15 basis points to a record low -0.35pc, while leaving its lending rate at 0.05pc, insisting that it has "enough tools to defend" its peg despite pressure from the falling euro.

The move comes just three days after the bank cut both rates by 15 basis points to prevent the krone from strengthening amid speculation that Denmark would follow Switzerland in abandoning its peg against the euro.

Denmark's currency has come under increasing pressure from the weakness of the euro, which on Thursday fell to an 11-year low against the US dollar after the ECB fired the starting gun on QE.