The krone rate has modest impact on the current account

Analysis - January 2019 - No. 2

Authors Kramp, Paul Lassenius; Jørgensen, Casper Winther Nguyen; Jensen, Peter Kjær; Haugaard, Deanie Marie
Subject Danish Economy; Balance of payments! foreign trade and external debt
Type Analysis
Year 2019
Published 16 January 2019
The analysis examines the extent to which the krone exchange rate affects the current account. The krone rate turns out to have only a modest impact on the current account and it comes with a lag. Although globalisation has increased trade with the rest of the world and has resulted in production chains being split across countries, the impact of the krone rate to the current account has been stable over time. In the long term, the current account is driven by factors other than the krone rate.