Tuesday, January 20, 2015

The Danes cannot defend the peg; it has a dilemma .

Why the Danes could see another currency run...

Pegs attract raiders as they are anomalies in the market dynamics.
Interest rates in Denmark have continued to fall, to historical lows, and the low level of interest  have not triggered investment activity. The commodity prices grain, pigs and milk have adversely affected Denmark. .

There is thus going to be just about speculative financial activity.     

In a sudden reversal charge: there could be an  international hunt for Danish  crown; it would be overwhelming for this small nation. 


Danish  crown could rise and counter party euro prices might plummet. 
the trend may be intensified by sales orders in euro;
there could be some queues at the entry; 
there could be knock-on effect across asset classes in Europe.   

There could be direct losses in the global market due to these  price adjustments for Danish  financial assets.

Views expressed without any risk or responsibility.






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