Foreign Exchange Guide to the Faroe Islands
In this guide we review :
- Danish krone info - general info about the Danish krone
- Danish krone in the markets - recent DKK moves and predictions from the FX markets
- Buying Danish krone cash online - travel money for the Faroe Islands
- Sending money to the Faroe Islands - save on Danish krone bank transfers to the Faroe Islands
- Danish krone exchange rates - latest info & charts.
Danish krone (DKK) general currency information
The Danish krone contributes to a little less than 1% of foreign exchange market volume. It is the world’s twentieth most traded currency. The krone is subdivided into 100 øre.
Denmark is one of more than twenty nations and territories which currently pegs its currency to the euro. Denmark is the largest nation to do this.
Denmark is a member of the European Union but like the UK and Sweden, among other countries, it opted out of adopting the euro upon its introduction in 1999.
As part of the ERM II mechanism, the krone is restricted to moves of 2.25% above or below a fixed euro-krone exchange rate of 7.4604. In other words, the euro-krone rate can trade only between 7.2925 and 7.6282, and it is the role of Denmark’s central bank, Danmarks Nationalbanks, to ensure this happens.
Since 2004, the EUR/DKK rate has traded well within its allowed boundaries. Several times it ventured above 7.47, but no higher, and its most dramatic fall was only to 7.42.
Against the world's reserve currency, the US dollar, the krone was historically strongest in April 2008 when USD/DKK fell to just 4.66. The krone was at its weakest in February 1985 when USD/DKK reached 12.37.
Danish krone (DKK) in the markets
The Danish krone is pegged to the euro (see General Info, above) and as such it shares the same general trading patterns and outlook as does the single currency.
Approaching the end of October, the dollar was buying 6.4 krone – the krone’s weakest level in three months. The dollar had fetched only 6.15 krone in September.
The krone weakened in late October along with the euro following the ECB’s announcement that it would proceed cautiously with the normalization of monetary policy – specifically, that there would be no “sudden end” to the bank’s quantitative easing program and a zero percent interest rate would be preserved “well past” QE’s eventual termination date.
In September, Dutch bank ABN Amro predicted EUR/USD would rise to 1.3 by the end of 2018. Given the krone’s peg to the euro, this suggests a move in the USD/DKK rate to the low 5.7s. As reasons for the euro’s (krone’s) climb, ABN cited “strong conviction” on future US dollar weakness and less stimulative ECB policy.
Medium term forecasts from Credit Agricole and Bank of America Merrill Lynch in October placed EUR/CHF between 1.18 and 1.20, and are suggestive of strength in the krone to levels between 6.2 and 6.3 per franc, from October’s rate of 6.403.
Faroe Islands Trip Checklist
Travel money for the Faroe Islands
Save money and time by Ordering your Danish krone online from Travelex, you get better rates and can pick up the DKK cash locally or even on travel day at the airport.
Another popular option is to use a Pre-paid Travel Card. Your Debit/Credit Card provider will charge you 2% from market mid-rate, but your bank may also charge an extra 3% as an “Overseas Transaction Charge” plus “Overseas ATM” fees for withdrawing cash.
For card purchases if offered a choice of currencies always select to Pay in Danish krone otherwise you may get much worst exchange rates.
Sending money to the Faroe Islands
When sending money to the Faroe Islands it’s important to compare your bank’s rates & fees with those we have negotiated with our partner money transfer providers. To get a better deal you should follow these 3 simple steps :
- Open an account with a BER reviewed FX provider (id docs may be required)
- You specify the local or Danish krone amount you want to transfer
- Make a local currency domestic transfer for the requested amount to the provider's bank account in your country
- Once your funds are received by the provider the converted DKK amount will be transfered to the recipient account you specify in the Faroe Islands.
By comparing the rates of FX specialist providers rates versus your bank's standard rates you can hopefully save around 5% and maybe more - end result is more Danish krone deposited into the recipient bank account in the Faroe Islands and less margins and fees kept by the banks!