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 Exchange-rate risk is the risk that the value of the debt in kroner increases as a consequence of a change in exchange rates. The central government holds foreign debt in order to maintain the foreign-exchange reserve.
The foreign government debt is exposed solely in euro, which entails a low exchange-rate risk due to Denmark's fixed exchange-rate policy vis-à-vis the euro.
Re-lending to Danish Ship Finance is normally denominated in US dollars, but the exchange-rate risk is hedged by transacting currency swaps from kroner to US dollars, whereby the payment flow corresponds to the redemptions on the re-lending. Overall, the central government's re-lending in US dollars therefore does not entail any exchange-rate risk.
Defence Command Denmark (Ministry of Defence) has access to an exchange-rate hedging facility with Danmarks Nationalbank. Via this facility the central government can hedge the krone value of future military procurements in US dollars.
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