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After several centuries efforts the Danish government will pay loan of 1.5 billion USD, which will free it of its debt in foreign currency for the first time in at least 183 years. Actually the period was probably even longer, as Denmark took their first loan in another currency in 1757 – from Hamburg and Amsterdam, said the central bank.

The last time Denmark was so close to the repayment of its foreign currency debt at the end of the 80s, when its obligations are less than 1% of its gross domestic product (GDP). The low European interest rates at that moment, however, make financing of projects such as new railways more attractive through external debt, so borrowing begins again.

In recent history the issue of external debt is a means of ensuring sufficient reserves in foreign currency. After Denmark binding Krone to the Deutsche mark and later the Euro, starting in the late 70s, the market interventions are used to adjust the value of the krona, which requires reserves of foreign currency sales and purchases.

Now Denmark joins neighboring Norway and Germany among the countries that have sovereign debt in foreign currency. The Swedes, for example, maintain about 30% of its debt in foreign currencies. It is not uncommon, it is undesirable for countries that issue debt to accumulate foreign exchange reserves.

The US Treasury, for example, owes around 1 trillion USD debt in foreign currency. The debt issuance in dollars become less attractive because of rising interest rates in the US, but many countries, especially in emerging markets still consider it more accessible than borrowing in local currency at much higher interest rates.

The Government of Denmark still has debts of around 465 billion DKK (67 billion USD), equivalent to 23% of GDP at the end of last year, which is quite low by international standards. About 40% of its debt is held by foreigners, who henceforth will get their money back only in Danish Krone.

