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Annual Report

Exchange rate, interest rate and commodity price trends

EXCHANGE RATE TRENDS

Economic developments were dominated by uncertainty in fiscal year 2010. Individual economic regions recovered to varying degrees from the financial and economic crisis and the associated expectations had a strong effect on exchange rates. The euro weakened against the US dollar in the first half of the year, but subsequently recovered. For 2011 and 2012, we expect the euro to remain strong, despite high sustained volatility in the financial markets.

INTEREST RATE TRENDS

Expansionary monetary policy in many countries and comparably low rates of inflation resulted in very low interest rates in fiscal year 2010 that have hardly changed at the beginning of the current fiscal year. However, we expect short-term rates to rise somewhat over the course of 2011 especially in Europe. Long-term interest rates will also rise slightly around the world. The trend towards increasing short-term and long-term interest rates is also expected to continue into 2012 due to growing inflationary trends.

COMMODITY PRICE TRENDS

Volatility was very high in commodities markets in fiscal year 2010. Prices rose sharply – with severe fluctuations – as a consequence of the quick recovery of the global economy. In Europe, however, the increase was moderated by the stronger euro. The question of how commodities prices develop in the future depends mainly on whether the global economy continues to record stable growth. The high volatility will continue in the medium term, although we do not anticipate any significant price reductions.

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