COPENHAGEN, Jan 5 (Reuters) - Denmark's foreign exchange reserves rose by 39.9 billion Danish crowns ($7.46 billion) to 212.7 billion in December, the central bank said on Monday -- a bigger than expected rise that boosted the chances of interest rate cuts.
Analysts polled by Reuters had forecast that the foreign currency reserves would rise to 191.8 billion crowns, excluding central government foreign loan transactions.
The central bank said it had bought foreign currency in December for 23.4 billion and that the central government had obtained foreign loans worth 16.5 billion.
"The foreign reserves have reached a level that under normal circumstances would be consistent with a much lower interest rate spread (to the ECB rate) than the current one," said Helge Pedersen, chief economist at Nordea.
"So if all goes well we can look forward to a 0.5 percentage point cut to 3.25 percent already next week, which would be a good beginning to a difficult year for the Danish economy," Pedersen added.
Nationalbanken has no inflation or money supply target but adjusts rates and intervenes in the currency market for the sole purpose of keeping the crown stable against the euro.
The crown is pegged to the euro in a 2.25 percent band around a central rate of 7.46038 in the ERM-2 grid. (Reporting by Gelu Sulugiuc; editing by Stephen Nisbet)