The package of measures announced by the ECB President Mario Draghi on Thursday (rate cut to 0.05%, the deposit rate -0.2% and plan purchase of private debt, in short) carried the euro against the dollar immediately below the 1.30 level “greenbacks” and the currency depreciated against the major currency references worldwide. So far this year, the single currency accumulated a decrease of 6.1% compared to its American counterpart, and 7.2% from the annual peak in April (almost $ 1.40).
The ECB move, a clear stimulus to the depressed economy of the euro area and for the budget flexibility of the states, will bring improvements in price competitiveness for the fall of the euro, favoring exports of the countries of the single currency and will boost their trade balances. In addition to lower sales, it will also cause a slight brake on imports for the opposite reason.
The automotive sector (specifically, German) will be one of the major beneficiaries of the measure. Brands like Volkswagen or BMW struggle to compete in the American market, dominated by Toyota and Ford, and the adjustment of the prices of its most popular models favor their penetration of the American giant. The base model of the Golf, for the same price today would be worth $ 1,000 less than in April, for example. And if the objective of the ECB, which stand at around 1.25 “greenbacks” the single currency, saving for an American import this model could be up to $ 1,500.
As is true companies to benefit most will be those more diversified. Thus, large multinational Dow could register additional 5% increments until your benefits with euro located at $ 1.25, according to expert estimates.
The package ECB to devalue the euro threatens to generate a “war” between the foreign central banks, but for now the ECB counterparts have made no aggressive moves. In the coming months, the Federal Reserve and the Bank of England may probably rise to improved rates of employment in their respective economies.
Experts believe that the stimulus measures of the ECB were necessary, but late. Stephanie Lindeck analyst Julius Baer, says that the “cannon” of the institution “is justified and should have been implemented before this year.” “The real effect of what was announced by Mario Draghi is complex to calculate and can be measured only after a significant period of time”, says Lindeck.
After the announcement of the asset purchase program (ABS) and the rate cuts, Bank of America Merrill Lynch believes that the ECB “is running out of ammunition.” It also opens the door to the body to discuss the purchase of bonds in early 2015 The complete package of measures announced Thursday “should stimulate industry funding, boost confidence and potentially help the foreign sector”, says the company, highlighting the importance of sanitation in the trade balance of the euro area.
Ebury experts, meanwhile, are more pessimistic about the evolution of the economy, do not provide “a significant change in .; most relevant “and expect” a formal program of quantitative easing to be announced before the end of the year “
Finally, Tom Rogers, of Ernst & amp economic indicators Young, believes that “governments have a responsibility to their growth prospects improvements while looking to the ECB” and that one of the major objectives of the measures of Mario Draghi is to “increase lending.”
A ‘QE’ to European is starting to discount the debt markets, as the interests of European bonds are at historic lows area. It is quite likely that the coupon on Spanish ten-year bond pierce 2% this year, which would save about 6,000 million in so-called public liability as a service.
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