Denmark's central bank will remain on high alert in 2017 to defend its safe-haven currency, which is expected to face more upward pressure from booming US investments and political risks in Europe, the country's biggest bank said on Tuesday. The Danish crown, considered a hedge against political uncertainty in the euro zone by many investors, reached its strongest level against the euro since 2012 in December.
A large share of Danish pension savings are invested in US stocks, so the recent rally there has resulted in "substantial wealth gains for Danish savers" and further strengthened the foundation under the crown, Danske Bank A/S said in a 2017 outlook note.
Upcoming elections in The Netherlands, France, Germany and potentially also Italy, and the negotiations about Britain's exit from the European Union, could also strengthen the crown further.
"We could see additional DKK (crown) buying if EU and euro opposition gains further ground this year," Danske said.