Danish central bank hikes interest rate to 5 pct

"Denmark's Nationalbank has intervened in the foreign-exchange market to support the krone. The intervention has now reached a point which leads to Denmark's Nationalbank's increase of the lending rate," the bank said in a statement.

It said the size of the increase reflects the need to reestablish a positive interest-rate spread toward the rates of the European Central Bank.

Denmark is a member of the European Union, but has stayed outside the 15-nation euro zone. It routinely follows European Central Bank changes, as part of a policy of trying to keep Denmark's currency, the krone, stable against the euro.

However, the Nationalbank said there recently has been a negative interest-rate spread, which has led to an outflow of foreign exchange.

"Since mid-September there has been an increase in ECB's marginal rate. This has reduced the spread between Denmark's Nationalbank's lending rate and ECB's marginal rate," it said in a statement. The central bank also plans to raise the discount rate and the interest rate on banks' current accounts by a quarterpoint to 4.5 percent.

The increases will come into effect as of Wednesday.