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    Capital outflow from Europe hits record

    Difference between profitability of US and Germany treasury bonds reaches 25-year high

    Baku. 22 December. REPORT.AZ/ Record capital outflow from Europe is reported according to data released in September 2016. Report informs, referring to Vestifinance.ru, it was stated in report of European Central Bank (ECB).

    According to ECB statistical report, this is largest outflow since establishment of Eurozone. Thus, during reporting period, European investors purchased shares and bonds worth 497.5 bln EUR outside of Eurozone. Global investors sold financial assets worth 31.3 bln EUR in Eurozone. Thus, total outflow amounted 528.8 bln EUR. As a result, USD/EUR exchange rate declined to 14-year low 1.0350. Analytics predict establishment of parity between euro and US dollar in coming period.

    Notably, US federal reserve’s (Fed) decision to establish interest rate at 0.75% and announcement of three possible rises in 2017 boosted demand for US dollar. 0% and negative interest rates in Eurozone stimulates escape from Euro. As a result, interest of investors for US assets rises.

    Experts of Canadian bank TD Securities think that the rising difference between monetary policies of Fed and ECB puts pressure on Euro and raises interest to US dollar: “In first months of new year Euro will drop to parity with and even lower than US-dollar”.

    After Fed having raised the interest rate, the difference between profitability of bonds of US and main economy of Eurozone – Germany reached is maximum in 25 years. Thus, the profitability of US treasury bonds raised to 2.566%, while that of Germany’s state bonds is at 0.27%. 

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