Foreign exchange dealers estimated that DM5bn of central bank reserves had been spent in the support buying operation to little noticeable effect. Three waves of intervention were launched, starting in late morning. The banks then intervened continuously from late afternoon.
The Danish central bank was rumoured to have only enough reserves left for one more day's intervention by the close of trading. The intervention was the heaviest seen so far in the latest bout of ERM tension, but less than in earlier crises.
'The intervention was public, noisy and it hasn't worked,' Paul Chertkow, of UBS, said. He added that the pressure was unlikely to melt away next week and that the Bundesbank might eventually have to cut interest rates again to save the ERM. Malcolm Barr, of Chemical Bank, said the key German discount rate would have to be cut at the next Bundesbank council meeting in 12 days' time.
Alison Cottrell, of Midland Global Markets, said the Bundesbank's room for manoeuvre would be seen to depend on next week's German inflation and money supply figures.
The Danish central bank raised its discount and deposit interest rates from 7.25 to 9.25 per cent in an attempt to ward off the speculators. The Danish economics minister and central bank governor both pledged to defend the krone's parity. The krone closed at Dkr3.8925 to the mark, just above its floor of Dkr3.9016.
The Netherlands - whose currency is in the ERM's hard core - also cut its special advance interest rate from 6.7 to 6.6 per cent in an attempt to ease pressure on the krone.
The trials of the krone kept the French franc away from the direct line of attack, but it weakened to close at Fr3.4180, one and a quarter centimes above its floor. There were rumours that the franc and the krone would be devalued either over the weekend or next week.