Exchange rate, interest rate and commodity price trends


The global economy gained a little momentum in 2014. The US Federal Reserve’s trimming of its bond-buying program led to an increased inflow of capital in the dollar area. This in turn substantially impacted exchange rates, leading to considerable volatility. After comparative stability in the first half of 2014, the value of the euro fell significantly against the US dollar and the Chinese renminbi as the year progressed. From the beginning of the year, sterling proved to be more robust than the single currency. The Russian ruble depreciated progressively up to the end of the year. For 2015, we expect euro exchange rates against the US dollar, Chinese renminbi, sterling and other key currencies to be relatively stable, despite continuing high volatility in the financial markets. The expectation is that the Russian ruble will remain weak. However, there is still an event risk – defined as the risk arising from unforeseen market developments. We currently assume that this trend will continue in the period 2016 to 2019.


Interest rates remained extremely low in fiscal 2014 due to the expansionary monetary policy many countries are still pursuing and the challenging overall economic environment. While it became apparent in the USA and the UK that the extremely loose monetary policy was drawing to an end, the European Central Bank cut its key interest rate further over the course of the year. In light of further expansionary monetary policy measures in the eurozone, we therefore consider it unlikely that interest rates will rise significantly in 2015. In the USA and the UK, however, we can expect to see a moderate increase in interest rates. For the period 2016 to 2019, we anticipate a gradual rise in interest rates.


Many commodity prices decreased in 2014. This was principally due to excess supply, but also to weaker economic signals from China and the strong US dollar. Assuming somewhat stronger growth in the global economy, we expect prices of most exchange-traded raw materials in 2015 to fluctuate around the current level. Provided there is a further recovery, we believe that commodity prices will rise in the period 2016 to 2019.