LONDON, Feb 5 (Reuters) - The Danish crown slipped on Thursday after Denmark cut interest rates deeper into negative territory in a bid to ward off upward pressure on the currency.
Denmark’ central bank lowered the certificate of deposit to -0.75 percent, the same as the Swiss National Bank’s equivalent, from 0.50 percent.
The crown weakened to 7.4480 crowns per euro from around 7.4462 beforehand. It layer pared losses to trade at 7.4458 crowns.
The latest rate cut, the fourth since Jan. 19, comes just days after data showed the central bank intervened with a record $16 billion in the foreign exchange market to weaken the crown.
Currency flows into Denmark have picked up on speculation it may abandon the crown’s peg to the euro, after the SNB removed its cap on the franc three weeks ago.
Under the Exchange Rate Mechanism (ERM2), Denmark agreed to keep the crown in a corridor of 2.25 percent either side of a central parity exchange rate of 7.46038 crowns to the euro. In practice, it has kept it in a tighter range of 0.50 percent either side.
Central bank chief Lars Rohde said the bank had the necessary instruments to defend the peg for as long as it takes. (Reporting by Anirban Nag, editing by Nigel Stephenson)