How has Germany Benefited From the Euro Crisis?
While Greece, Spain, Italy, and many other Euro-zone countries are suffering as a result of the recession, Germany has been able to thrive in spite of the Euro crisis. Not only is the German government currently enjoying negative interest rates on bonds, but unemployment is reducing while the number of exports is growing.
In an unprecedented economic situation, Germany has been able to borrow €3.9 billion for the next six months at the incredible interest rate of -0.01%. In recent years, Germany has had to pay 1.8% interest on such bonds.
So what is the reason for such a windfall? Well, amid the Euro crisis, Germany is one of the few borrowers that have been seen as a safe haven. Many investors would therefore rather lend money at an extremely low rate than risk losing it.
Currencies Direct, one of Europe's leading currency exchange providers, believes that this is becoming a trend for the Euro crisis, as Germany seems to be profiting while other nations are struggling.
Italy, for instance, are currently being forced to pay a record interest rate of 7%, as lenders have little trust for the government in Rome. Investors are also beginning to question whether Mario Monti can reduce the €1.9 trillion debt without stifling the economy. Meanwhile, Spain and Ireland are also suffering from sharply rising bond yields.
This situation is in stark contrast to Germany, who has benefitted from favourable exchange rates as a result of the weak Euro. The Euro has now fallen to $1.27, which is the lowest since November 2010. The weak Euro consequently means that exports to outside of Europe are more competitive. German exports have, as a result, increased to 2.5% month on month since November, reaching €94.9 billion.
The financial situation has become quite bleak for Europe, as recent projections from the Institute of Economic Research have revealed that the economies of France, Spain, Italy, Belgium, Greece, Portugal, and Cyprus will shrink in 2012. The German economy, on the other hand, is set to grow by 0.4% this year.
For more information regarding currency exchange, the Euro zone crisis, or to simply view the dollars to pounds exchange rates, visit the Currencies Direct website.
About Currencies Direct
Currencies Direct is one of Europe's leading non-bank providers of currency exchange payment services. Since its formation in 1996 Currencies Direct has evolved and positioned from being an innovative service provider of foreign exchange for consumers and high net worth individuals into a dynamic and pioneering 'business to business' fully integrated treasury solution service provider.
Head quartered in the City of London (United Kingdom) with operations in Europe, Africa, Asia and the United States, Currencies Direct is part of the Azibo Group, a privately owned investment company.
