Group Management Report

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Exchange rate, interest rate and commodity price trends


In 2021, the euro appreciated slightly against the US dollar on an annual average, but fell slightly against sterling. Here, the new EU-UK Trade and Cooperation Agreement continued to cause uncertainty. The euro appreciated against the currencies of some emerging markets, in some cases considerably. In particular, the Argentinian peso, Turkish lira, Brazilian real and Russian ruble lost value against the European single currency. The South African rand, Chinese renminbi and Mexican peso appreciated year-on-year against the euro. The currencies of some Asian emerging markets weakened against the euro on an annual average. For 2022, our planning anticipates that the euro will strengthen somewhat against the US dollar, pounds sterling and the Chinese renminbi. We assume that the Argentinian peso, Brazilian real, Mexican peso, South African rand, Russian ruble and Turkish lira will depreciate further. As a result of the Russia-Ukraine conflict, we expect additional pressure on the Russian currency. For 2023 to 2026, we expect that the euro will be stable against the key currencies, while the comparative weakness of the currencies in the aforementioned emerging markets will probably continue. However, there is still a general event risk, defined as the risk arising from unforeseen market developments.


The challenging macroeconomic conditions, particularly as a result of the ongoing Covid-19 pandemic, resulted in interest rates around the world remaining very low in relative terms in fiscal year 2021. National central banks in the major Western industrialized nations made hardly any adjustments to their key interest rates, while in contrast they were increased in several emerging markets. The US Federal Reserve and the European Central Bank left their key interest rates at a low level. While the Bank of England already implemented a first increase in rates at the end of 2021, the US Federal Reserve expects rate hikes in 2022. With monetary policy remaining relatively expansionary, we expect a gradual departure from the existing measures in 2022. Changes in key interest rates will depend to a considerable extent on inflationary trends in the individual countries. Whether the higher inflation rates currently being seen in many countries are judged to be temporary or lasting will be crucial here. Base effects resulting from the Covid-19 pandemic and disruption to supply chains could be seen as grounds to assume that they are a temporary phenomenon. We expect interest rates to increase slightly for the years 2023 to 2026.


The global spread of the SARS-CoV-2 virus has also affected commodity markets. As a result of the imbalance between supply and demand both during the pandemic and during economic recovery the increase in the price of many raw and input materials was very high in relative terms during 2021. Compared with the previous year, there was a rise in the average prices of the commodities coking coal, lithium, crude oil, cobalt, copper, iron ore, natural rubber, aluminum, nickel and lead. The price of the precious metals platinum and palladium, and especially of rhodium, also rose on average over the year. Based on analyses of factors of influence and of trends in the commodity markets, we expect the prices of most commodities to continue to increase in 2022. There is a risk that this will be exacerbated as a result of the Russia-Ukraine conflict. For the years 2023 to 2026, we anticipate continued volatility in the commodity markets with prices trending both upwards and downwards.