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CURRENCY

Denmark tries to quell euro peg rumours

Currency speculators are closely eyeing Denmark's deposit rate cuts as a sign that it might drop its peg against the euro but the economy minister cautions that "situation should not be overly dramatized".

Published: 21 January 2015 10:02 CET
Denmark tries to quell euro peg rumours
Currency speculators are keeping an eye on the actions of Nationalbanken. Photo: Colourbox
The decision by Denmark’s central bank, Nationalbanken, to reduce its deposit rate to -0.02 percent in the wake of Switzerland’s removal of its currency peg against the euro has speculators wondering if Denmark will do the same. 
 
But in an interview with Bloomberg on Tuesday, Economy Minister Morten Østergaard tried to silence the rumours by saying that the Swiss decision was based on “circumstances significantly different from Denmark’s”. 
 
“Any comparison between Denmark and Switzerland is impossible,” he said. 
 
A spokesperson for Danske Bank, Denmark’s largest, told Bloomberg that Denmark will likely carry out another rate cut on Thursday when the European Central Bank unveils a vast bond-buying programme aimed at kickstarting growth, which has put pressure on the euro.
 
A Nordea analyst told The Local last week that the Denmark’s interest rate could continue to fall. 
 
“There’s definitely a scenario where we can see the Danish interest rate going to a record low,” Nordea analyst Jan Storup Nielsen told The Local. 
 
 
The bank said it has been fielding many calls from offshore investors gauging Denmark’s plans following Switzerland’s surprise move.
 
Denmark's monetary policy is aimed at maintaining a stable exchange rate between the Danish krone and the euro.
 
The krone is pegged to the euro through an agreement known as the European Exchange Rate Mechanism (ERM II), under which the Danish currency can move only 2.25 percent up or down from a fixed rate of 7.46 krone per euro.
 
 
On Wednesday, the krone was trading at 7.436 per euro. 

 

Østergaard pointed to this “long-lasting and politically firmly anchored fixed-currency policy” in his attempt to silence speculators. 
 
“This situation should not be overly dramatized,” he told Bloomberg. 
 

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CURRENCY

Spanish town brings back the peseta in bid to boost spending

They haven't been legal currency in Spain since 2002 but residents in one town in Valencia can now spend any old pesetas they have hidden away thanks to a scheme aimed at boosting spending during the coronavirus crisis.

Published: 28 October 2020 14:12 CET
Spanish town brings back the peseta in bid to boost spending
Old peseta notes and coins can be exchanged until the end of 2020. Photo: AFP

The Multipaterna Commerce and Services Association has launched a campaign that allows payment to be made with pesetas in certain establishments in Paterna, a town in the Valencian Community.

The campaign, which includes hardware stores, opticians, computer and electronics stores, real estate, florists, lingerie stores and parcel kiosks, will run until December 15th. 

For the rest of Spain those who still have the old currency there is still a few months left to convert them into euros, although they can’t spend them in shops.

Spaniards have been told that they have until December 31st 2020  to exchange their pesetas for euros and that applies for both bank notes and coins.

Any notes produced during the Franco era, which ran from the end of the Civil War in 1939 until the dictator's death in 1975 can be automatically changed by the Bank of Spain.

Those issued during the conflict can also be exchanged but the process will involve them being analysed by experts to confirm their authenticity.

And any coins still in circulation at the time that euros were brought in on New Year's Day in 2002 can also be exchanged at Bank of Spain headquarters in Madrid.

The exchange rate offered  by the Bank of Spain is 1 euro = 166,386 pesetas but the bank advised that commemorative coins and notes may be worth more as collectors' items than for their face value, which is all that will be offered in the exchange scheme.

The Bank of Spain estimates that pesetas worth some €1.61 billion are squirreled away in Spanish homes, cluttering up the drawers of old desks and trunks in dusty old attics.

Many will never see the light of the day and others have become collectors' items now worth more than their exchangeable value.

Spain adopted the Euro at the start of 2002 but pesetas were still legal currency during a transition period that lasted the first three months of that year.

Exchanges can be made in person at the Banco España building on Madrid's Calle Alcala or via a postal or online service, even available to those abroad.  For more information check out the official webpage of the Banco España HERE. 

By Conor Patrick Faulkner in Valencia

 

 

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