Geschäftsbericht 2011 englisch

15Management Report Münchener Hypothekenbank eG On the currency side, the euro initially gained in value over the US dollar during the course of the year due the Fed’s contin- ued expansive monetary policy. However, the US dollar recov- ered again as the European sovereign debt crisis worsened and the American economy improved towards the middle of the year. Investors viewed the Swiss franc as a safe haven last year as it gained notably vis-à-vis the euro and almost reached pa- rity. This development placed such great pressure on the Swiss economy that in September the Swiss National Bank declared that they would enforce a minimum exchange rate of CHF 1.20 per euro. To date, this measure has proven to be an effective restraint on the Swiss franc’s exchange rate. “Pfandbriefe and other covered bonds originating in EU core states also proved to be reliable refinancing instruments during the turbulence experienced by the markets in 2011.” The European Central Bank’s (ECB) interest rate policy was driven by the rising rate of inflation until the fall of 2011. By July the ECB had increased its key interest rate in two steps of 25 basis points each to 1.5 percent. However, the ECB later 1.0 2.0 3.0 4.0 January February March April May June July August September October November December yield on ten-year bunds 2011Figures in % Source: Bloomberg reversed course and lowered its main rate back to 1 percent in two back-to-back steps in November and December as favour- able development in the eurozone slowed and the sovereign debt crisis widened. The Fed did not change its main interest rate and continued to hold it at a target range of 0 percent to 0.25 percent and declared that it intended to hold rates at this level until 2014. The ECB continued to provide extensive liqui- dity as part of its efforts to support the European banking system and strengthen sovereign bonds issued by the weaker EU member states. It offered banks almost unlimited liquidity and in October 2011 took the additional step of reintroducing its longer term refinancing operations that offered maturities of longer than one year. These measures were viewed as a response to the increasingly tighter situation in the interbank market, which in turn led to far greater use of the ECB’s de- posit facilities by banks. Pfandbriefe and other covered bonds originating in EU core states also proved to be reliable refinancing instruments during the turbulence experienced by the markets last year. Total new issues of benchmark covered bonds denominated in euro float- ed in 2011 amounted to € 179 billion. Investors were primarily interested in German Pfandbriefe and French covered bonds, as well as in Scandinavian covered bonds. As a result, spreads for

Geschäftsbericht 2011 englisch

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