Germany Posts Record Current-Account Surplus

Germany posted a record current-account surplus just days after being placed on a U.S. watchlist for countries that may have an unfair foreign-exchange advantage.

The current-account gap climbed to 30.4 billion euros ($34.6 billion) in March, up from 21.1 billion euros the previous month, data from the Federal Statistics Office showed on Tuesday. The nation’s trade surplus, a narrower measure that only counts imports and exports of goods and services, widened to 26 billion euros, also a record.

The U.S. put Germany, China, Japan, South Korea and Taiwan on a new currency watchlist on April 29, saying their foreign-exchange practices bear close monitoring to gauge whether they provide an unfair trade advantage over America. The economies met two of the three criteria used to judge unfair practices under a February law that seeks to enforce U.S. trade interests. Meeting all three would trigger action by the president to enter discussions and seek potential penalties, including being cut off from some U.S. development financing and exclusion from U.S. government contracts.

While Germany has no direct influence over the value of its currency, being just one member of the 19-nation euro area, it was cited because of its current-account and trade surpluses. Taiwan made the list because of its current-account surplus and persistent intervention to weaken the currency, according to the Treasury.

Germany’s excess savings could be used to boost growth in the euro area, the Treasury said at the time. A report by the International Monetary Fund on Monday said the current-account surplus will probably stay near record levels this year.

The euro weakened by more than 10 percent against the dollar in each of 2014 and 2015, though it has strengthened this year. The single currency traded at $1.1383 at 9:04 a.m. Frankfurt time. It was at almost $1.40 in mid-2014, before the European Central Bank started an unprecedented monetary-stimulus drive that includes negative interest rates and bond purchases.

Bloomberg

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell