(Crazy) economy news

Skybird · 05-08-22, 06:18 AM

Somehow the sanctioning of the Ruble does not seem to work as intended...

25 of the world's 33 most important currencies have increased in value against the euro since last May. Surprisingly, the Russian ruble is at the top of the list. Only eight currencies are trading worse today than a year ago. One lost more than a third of its value.

Going on vacation this year could be a bit more expensive than usual - at least if you want to spend a few nice weeks outside the EU. The euro has lost value against the majority of currencies used around the world. Since the beginning of May 2021, the world's 33 major currencies have gained an average of five percent in value against the euro. Conversely, this means that these currencies have become 3.4 percent more expensive on average for Germans.

Although the weak euro makes vacations more expensive, it makes export-oriented companies happy. They are now earning more from their exports than a year ago. The calculation is simple: If a German company sells a product in the U.S. for $100, for example, it could exchange that for about 83 euros a year ago. Today, it receives 94 euros for it, i.e. around 13 percent more. Conversely, imports to Germany are becoming more expensive. What a German company could buy in the USA a year ago for the equivalent of 83 euros now costs 94 euros.

There are several reasons for the current weakness of the euro. One is on the other side of the Atlantic. Because the U.S. Federal Reserve has already raised interest rates significantly, but the European Central Bank (ECB) has not yet done so, investors in the U.S. are currently enjoying much better conditions than here in Germany. Accordingly, professionals now prefer to invest in the U.S. than in the euro zone. So they are selling euros and euro-denominated assets and buying the same in U.S. dollars. Accordingly, the demand for euros is falling and that for dollars is rising, which explains the price development of both currencies.

But the euro also fell against many other currencies. Here, the kinks in the exchange rate curves were particularly visible in recent months. They are connected with the war in Ukraine. Because of its geographical proximity alone, it affects Europe more than other continents. But it also has a greater impact on us because we trade more goods with Russia and Ukraine, especially oil, gas and coal from Russia.

The war means that energy prices in particular have risen more in our country than in many others. This leads to a weakening of the economy. But with a weaker economy, less money can be earned, which is why this is another reason for investors to exchange their investments held in euros, such as stocks or bonds, for those from abroad.

Surprisingly, the Russian ruble is at the top of the currency rankings. Its value has risen by almost 28 percent against the euro in the past twelve months. After a deep fall at the beginning of the Ukraine war, the exchange rate has even more than doubled since then. This has less to do with the currency's sudden popularity than with a trick played by the Russian government. Since the outbreak of the war, the government has forced Russian exporters to exchange 80 percent of their foreign currency earnings into rubles. Accordingly, these companies have to buy up many rubles on the market, and the high demand causes the exchange rate to rise.

In second place is the Brazilian real. It has gained around 23 percent in value in a year. Brazil is currently benefiting from two developments. Because commodity prices have risen sharply, the country's export revenues are flourishing. Iron ore, crude oil and copper are among the country's most important commodities. In addition, the Brazilian central bank has gradually raised interest rates from 2 to 10.75 percent since March 2021. On the one hand, this is necessary to combat the high inflation of 8 percent last year, but it also offers foreign investors attractive returns. However, the real is still at a low level. In the past five years, it has lost almost 35 percent of its value.

The Turkish lira has lost somewhat more in just one year. It is currently down 36.2 percent, making it the weakest currency against the euro in this period. The reason for this continues to be the misguided interest rate policy, which is significantly influenced by President Recip Tayyip Erdogan. Erdogan refuses to raise interest rates, despite galloping inflation of 61 percent. Accordingly, investors are fleeing the currency, which is devaluing faster than they can collect yields.

Turkey thus leads by far a field of eight currencies that have deteriorated against the euro. The other seven are mainly from other European countries, such as the Swedish krona, the Danish krone, the Polish zloty and the Hungarian forint. The Japanese yen also deteriorated due to the weak economic development there and persistently low interest rates. From South America, the Argentine and Chilean pesos were among the losers.

Translated with www.DeepL.com/Translator (free version)

05-08-22, 06:18 AM	#11
Skybird Soaring Join Date: Sep 2001 Location: the mental asylum named Germany Posts: 40,516 Downloads: 9 Uploads: 0	Somehow the sanctioning of the Ruble does not seem to work as intended... 25 of the world's 33 most important currencies have increased in value against the euro since last May. Surprisingly, the Russian ruble is at the top of the list. Only eight currencies are trading worse today than a year ago. One lost more than a third of its value. Going on vacation this year could be a bit more expensive than usual - at least if you want to spend a few nice weeks outside the EU. The euro has lost value against the majority of currencies used around the world. Since the beginning of May 2021, the world's 33 major currencies have gained an average of five percent in value against the euro. Conversely, this means that these currencies have become 3.4 percent more expensive on average for Germans. Although the weak euro makes vacations more expensive, it makes export-oriented companies happy. They are now earning more from their exports than a year ago. The calculation is simple: If a German company sells a product in the U.S. for $100, for example, it could exchange that for about 83 euros a year ago. Today, it receives 94 euros for it, i.e. around 13 percent more. Conversely, imports to Germany are becoming more expensive. What a German company could buy in the USA a year ago for the equivalent of 83 euros now costs 94 euros. There are several reasons for the current weakness of the euro. One is on the other side of the Atlantic. Because the U.S. Federal Reserve has already raised interest rates significantly, but the European Central Bank (ECB) has not yet done so, investors in the U.S. are currently enjoying much better conditions than here in Germany. Accordingly, professionals now prefer to invest in the U.S. than in the euro zone. So they are selling euros and euro-denominated assets and buying the same in U.S. dollars. Accordingly, the demand for euros is falling and that for dollars is rising, which explains the price development of both currencies. But the euro also fell against many other currencies. Here, the kinks in the exchange rate curves were particularly visible in recent months. They are connected with the war in Ukraine. Because of its geographical proximity alone, it affects Europe more than other continents. But it also has a greater impact on us because we trade more goods with Russia and Ukraine, especially oil, gas and coal from Russia. The war means that energy prices in particular have risen more in our country than in many others. This leads to a weakening of the economy. But with a weaker economy, less money can be earned, which is why this is another reason for investors to exchange their investments held in euros, such as stocks or bonds, for those from abroad. Surprisingly, the Russian ruble is at the top of the currency rankings. Its value has risen by almost 28 percent against the euro in the past twelve months. After a deep fall at the beginning of the Ukraine war, the exchange rate has even more than doubled since then. This has less to do with the currency's sudden popularity than with a trick played by the Russian government. Since the outbreak of the war, the government has forced Russian exporters to exchange 80 percent of their foreign currency earnings into rubles. Accordingly, these companies have to buy up many rubles on the market, and the high demand causes the exchange rate to rise. In second place is the Brazilian real. It has gained around 23 percent in value in a year. Brazil is currently benefiting from two developments. Because commodity prices have risen sharply, the country's export revenues are flourishing. Iron ore, crude oil and copper are among the country's most important commodities. In addition, the Brazilian central bank has gradually raised interest rates from 2 to 10.75 percent since March 2021. On the one hand, this is necessary to combat the high inflation of 8 percent last year, but it also offers foreign investors attractive returns. However, the real is still at a low level. In the past five years, it has lost almost 35 percent of its value. The Turkish lira has lost somewhat more in just one year. It is currently down 36.2 percent, making it the weakest currency against the euro in this period. The reason for this continues to be the misguided interest rate policy, which is significantly influenced by President Recip Tayyip Erdogan. Erdogan refuses to raise interest rates, despite galloping inflation of 61 percent. Accordingly, investors are fleeing the currency, which is devaluing faster than they can collect yields. Turkey thus leads by far a field of eight currencies that have deteriorated against the euro. The other seven are mainly from other European countries, such as the Swedish krona, the Danish krone, the Polish zloty and the Hungarian forint. The Japanese yen also deteriorated due to the weak economic development there and persistently low interest rates. From South America, the Argentine and Chilean pesos were among the losers. Translated with www.DeepL.com/Translator (free version) __________________ If you feel nuts, consult an expert.