|
|
|
|
Currencies |
| DANISH KRONE |
 |
| Introduction
| Overview | Structure
| History | Factors
affecting change in exchange rates | Daily
trend of Danish krone | Weekly
trend of Danish krone |
| Introduction |
|
Krone forms the official currency of Denmark and is also used in
Greenland and Faroe Islands. It is abbreviated as kr, DKR or as
Dkr in daily use. According to the ISO 4217 regulations, the
official currency code of the Danish krone is DKK and the numeric
code for the currency is 208. Krone is called "kroner"
in plural terms and has its subunit in the form of "øre".
Krone was established with the coming up of Scandinavian Monetary
Union in 1873.
|
|
Overview
|
|
The word krone has its meaning as "crown" in the English
language. Denmark is one of the highly technological agriculture
countries in Europe and as well as in the world. The country is
has its balance of payment in positive and this fact shows that
Denmark has a well-settled industry setup, most of them indulging
in the food and energy sectors. The developed economy of Denmark
enjoys a comparatively stable currency as it is closely pegged to
the euro. The self-governing provinces of Faroe Islands and
Greenland also make use of the Danish currency, Faroe Islands
generally use the Danish krone coins and Greenland use the
banknotes as well.
The government in Denmark in 1999 preserved
the Danish krone by bargaining the "opt outs" in the
Maastricht Treaty due to the attachment of the majority of
population with the krone but the country is still committed to
opt the euro in near future as it is the member of the European
union. The import and export of all the currencies in the country
is free though any amount exceeding 15000 euro has to be declared
with the customs.
|
|
Structure
|
The structure of the currency of Denmark
comprise of coinage in 7 denominations and
banknotes in 5 denominations. "Øre"
forms the subunit to the Danish krone and
divides one unit of the currency into 100 equal
parts. The 7 denominations of krone coins
include coins with the face values 25 and 50 øre,
1, 2, 5, 10 and 20 kroner. This current coin
series was introduced over a period of 5 years
from 1989 to 1993. The coins differentiate from
each other according to the color sequences they
are categorized into. The smaller denomination
coins i.e. 25 and 50 øre coins are made from
copper colored bronze, coins of denominations
1,2 and 5 kroner coins are minted from silver
colored cupro- nickel alloy and 10 and 20 kroner
coins are minted using golden colored aluminium
bronze. These 3 different sequences of coinage
bear 3 different images on the obverse sides of
the coins. The copper colored coins have the
image of crown of King Christian V, the silver
colored coins have the monogram of Queen
Margrethe II and the gold colored coins have the
portraits of her on the obverse. The silver
coins possess a hole in the center of the coins
and the gold coins have got the coat of arms of
Denmark engraved on their backside.
The krone banknotes include
the notes in 5 denominations that are 50, 100,
200, 500 and 1000 kroner. The front sides of the
notes have got images of the portraits of
important people in the history of Denmark and
the backsides of the notes show symbolic images.
The 50 kroner banknote is the smallest krone
note in circulation and it has the portrait of
Karen Blixen - famous writer. 100 kroner
banknote is often called the principal note in
the series, as it constitutes almost half of the
notes in circulation in the country. The
portrait on the 100 kroner note is of composer
Carl Nielsen. An image of Johanne Luise Heiberg,
actress, is depicted on the 200 kroner note and
the 500 kroner note shows the image of the Nobel
prize winner from Denmark, Neils Bohr. The
obverse side of the 1000 kroner bank note bears
a double portrait of artists Anna and Michael
Ancher. The list below mentions the images that
are shown on the backside of the banknotes
-
50 kroner note - stone
relief from Landet church
-
100 kroner note - a
basilisk
-
200 kroner note - a
lion
-
500 kroner note - a
dragon and a knight in armour
-
1000 kroner note - a
tournament scene from a sepulchral monument
The Danish coinage in the
currency is minted and banknotes are printed by
the Danmarks Nationalbank, the central bank of
Denmark, which has the sole authority to manage
the flow of currency in the country.
|
|
|
| History |
|
The currency system in Denmark came into existence in
1625 when rigsdaler was made the official currency of
the country. It had 3 subunits to it namely mark,
skilling and pfennig with a complex exchange among
them i.e. 1 rigsdaler = 6 mark, 1 mark = 16 skilling,
1 skilling = 12 pfennig. This complex rate regime
continued over a long period of time with some small
corrections in the mean while. In 1873, Scandinavian
Monetary Union was established constituting of two
countries i.e. Sweden and Denmark. The purpose of this
union was to revalue the currencies of the member
countries to put them at par with each other and
fixing them against gold. It was due to this monetary
union that krone was introduced in Denmark and became
the legal tender in the country. The currency got onto
the gold standard with a fixed exchange rate of 2480
kroner = 1 kilogram of fine quality gold.
During the First World War, the
gold rate of all the currencies was abandoned and
krone too, was affected by it. The Scandinavian
Monetary Union was dissolved and krone was brought
down but it was decided that the name of their now
separate currencies wont be changed. Denmark once
again fixed its currency to the gold standard in 1924
but it had quit it permanently in 1931. Krone was
pegged to the German reichsmark during the German
occupation from the year 1940 to 1945 but after the
Second World War was over it was pegged to the British
pound and US dollar. When in 1999, the European common
currency, euro was launched, most of the European
countries opted in favor of the currency but Denmark
moved out of the Maastricht treaty so that it could
protect its own currency.
|
| Factors
affecting the exchange rates between two countries
|
|
The volatility in the foreign exchange rates
depends upon a numerous macro economic factors that
have different degrees of importance to different
economies of the world. Some special and exceptional
factors affecting the rates may also exist in the case
of different countries. Following are shown the common
factors on which the foreign exchange rate depends
- Flow of imports and exports between the
countries
- Flow of capital between the countries
- Relative
inflation rates
- Fluctuation limits on exchange rate
imposed by the governments of the countries
- Merchandise trade balance
- Rate of inflation in the country
- Flow of
funds between the countries for the payment of
stock and bond purchases
- Relative growth
- Short term
and long term interest rate differentials
- Cost of borrowings
|
|
|
|
|
|
|
|
|
