Staff Papers are analyses, method descriptions and other professional contributions prepared by employees of Danmarks Nationalbank. Staff Papers are approved by the relevant Head of Department. The content expresses only the authors' own conclusions and should not be construed as an expression of Danmarks Nationalbank's opinion.
Global uncertainty, Danish kroner and safe havens
We investigate how the Danish krone has responded to financial market uncertainty shocks in recent decades. We show that Denmark only possesses some of the characteristics that usually define safe haven currencies, while other typical drivers of safe-haven flows are absent. Therefore, we also find a limited average and no systematic impact of global uncertainty shocks on the Danish krone, in contrast to other currencies that tend to either systematically appreciate or depreciate in periods of market stress. However, we do find some effects of euro-specific shocks that appear to strengthen the Danish krone more systematically. The results are consistent with recent uncertainty shocks and the stability of the Danish krone.
Staff Papers are analyses, method descriptions and other professional contributions prepared by employees of Danmarks Nationalbank. The content reflects solely the authors' own conclusions and should not be interpreted as representing the views of Danmarks Nationalbank.