• Euro Weakness, May 6, 2014‒February 6, 2015: This period saw the euro move from about $1.39 to about $1.13—a depreciation of nearly 19%. German exports were up 15.0%, while the MSCI Germany Index in local currency was up 14.9%―thus offering very similar returns. The real key was in not layering on the additional exposure of the euro, which drove down the returns of the MSCI Germany Index in U.S. dollars to -6.4% cumulatively over the same period.2
We encourage investors not to forget about Germany, especially if they believe that Mario Draghi’s program of quantitative easing has the potential to cause a further trend of euro weakness.
1Source: Bloomberg.
2Source: Bloomberg.
Important Risks Related to this Article
Investments in currency involve additional special risks, such as credit risk and interest rate fluctuations.
Investments focused in Germany are increasing the impact of events and developments associated with the region, which can adversely affect performance.