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August 2018

What effects in the world economy will the rise in rates have? How will it affect Spain?

  • US importers and tourists, investors in dollars and companies that sell to the United States gain with the rise in rates.
  • The Fed measure will appreciate the dollar and will hurt emerging economies, countries and companies with debt in dollars and tourism to the US.
  • In Spain, the most affected are the companies present in Latin America, but those with activity in the United States benefit.
  • The Fed raises US interest rates for the first time in a decade.
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Who loses with this rise in rates?

  • The countries indebted in dollars . “Emerging economies, heavily indebted in dollars, will be among those who suffer most from this decision,” says Daniel Pingarrón, market strategist at IG. These countries have borrowed heavily in dollars since 2008, taking advantage of the depreciation of the currency by the stimulus of the Fed. Now they will be clearly harmed by the potential appreciation of the US currency. For them it will be more expensive now to pay back their debts . And there are almost 10 trillion dollars of bonds issued in this currency by countries that are not the United States, fundamentally emerging. “An increase in the bankruptcy of companies in these countries is expected,” said a report by the insurer Crédito y Caución on Tuesday. Among the most affected: Turkey, Brazil and Russia.
  • Investment in emerging countries . Developing nations are one of the major concerns of international organizations for the rise in rates. Investors will now find it more profitable to invest in dollars, so emerging countries could lose deposits in their currencies. “The change in capital flows to the US led in the past to financial crises or breaches of emerging states.” The markets most vulnerable to this change are Turkey, Indonesia, South Africa and Malaysia explain in Crédito y Caución, however, Tomás García -Purriños, an analyst at MoraBanc AM , estimates that “a large part of the rate hike on Wednesday and the one expected for 2016 is already discounted”, so that the capital outflow “would have already taken place”.


  • The tourism sector of the United States . Travelers from other countries will see how currency exchange agencies will give them less dollars than before for the same amount of their national currency. So tourism in the United States could suffer, both in number and in the expense of travelers in the country.
  • US exporters and importers from other countries . The appreciation of the dollar will be harmful to the external competitiveness of its products. With a more expensive dollar, foreign buyers of US goods will now have to pay more money for the same good, so now, if they can stock up in other markets, they might decide to buy it in other markets.

And who benefits?

  • Savers and investors in dollars . The rate increase will increase the remuneration of deposits in dollars. It will not be an immediate effect, but a gradual one, and it will attract more capital to the US, especially if, as several analysts estimate, the rate hike continues next year until it reaches 1%. Investors would make their money more profitable in the United States than, for example, in Europe, where the rates are at 0.05% . And it could turn around the 2008 trend, in which capital flows left the United States to emerging countries in search of higher returns.
  • Importers from the United States and exporters from other countries . The rise in rates will cause the investment in dollars to grow, given that the retribution in that currency will be higher. So the decision of the Fed will produce an appreciation of the dollar against the rest of currencies . That stronger dollar will benefit US importers, who can buy the same products from other countries by paying less dollars for them; On the other side of the transaction, the exporting countries will have made their products more attractive and competitive so that they are bought in the United States.
  • American travelers and tourism from other countries . American tourists are in luck, because it will be cheaper for them to travel to other countries . And the most touristic countries are in luck, because they will see an increase in the number of travelers from that country and their spending.

How does it affect Spain?

  • Bad for companies based in Latin America . If the Southern Cone suffers due to the appreciation of the dollar, the business of Spanish companies in the region – Banco Santander, Telefónica or Mapfre – will also suffer from the possible contraction of demand in those countries . “In the case of the two large Spanish banks BBVA and Santander, the rise in rates leaves them a bittersweet taste: they will appreciate the foreseeable improvement in the margin of interest in their US subsidiaries, but they could see the problems they already have in their business worsened. Latin America “, explains Felipe López-Gálvez, an analyst at Self Bank .
  • Sell ​​in dollars, good business. A rise in rates, on the other hand, would be good for Spanish companies that generate a lot of income in dollars for developing a large part of their activities in the United States, such as Grifols , Viscofan or the ACS construction company. “For these companies, a strong dollar is good news,” says López-Gálvez.
  • Traveling to the United States will be more expensive . If the dollar is revalued more as a result of the rate hike -something that the market has already discounted in the last year, in which the euro has depreciated more than 10% against the dollar-, it will be more expensive for Spaniards travel to the US because they will receive less US currency for each euro. On the contrary, for the American it will be cheaper to travel to Spain , which will benefit our tourism sector.
  • The exporters to the USA are in luck . With a more appreciated dollar, it will be cheaper for Americans to buy Spanish products . “Although the effect on our exports would not be so great because most of them go to the eurozone,” Joaquín Maudos, professor of economics at the University of Valencia and deputy director of IVIE, recently qualified 20 minutes ago. In fact, exports to the European Union weigh almost 65% of Spanish sales abroad, by only 4.6% of exports to the United States. Now, with the appreciation of the dollar, exporters to the United States could see their sales increase.

Susana Diaz defends that there has not been a single "macula" in his Government and Moreno demands "not to play with stability"

Image result for president of the board susana diazSEVILLA, 13 (EUROPA PRESS)

The president of the Board, Susana Diaz, said Thursday before the House of Parliament that the PP-A is “nervous” because, despite having “tried everything”, has not been able to find a single “stain” in his Government and, for that reason it is necessary to “go back” to cases of ten or fifteen years ago that are being investigated in the courts, while the president of the popular ones, Juanma Moreno, has accused her of “covering up corruption” and has demanded stop “playing with stability” in the community.

Susana Diaz has defended, during her debate with Moreno in the control session of the House Plenary, that Andalusia is an “example of stability” and that there are half a million unemployed less since she is president. He wanted to make it clear that he has a solid Government, with priorities, objectives and that he is working, which has allowed Andalusia to grow as it has not grown before, and that today has the highest GDP in its history and with a record in exports.

It has also put in value that it will be the first community to go out to the financial markets because “it has done things right”. At the same time, he has indicated that the arrival of the PSOE to the Government of the nation has made possible that there is now a president, Pedro Sánchez, who is on the phone every time he calls and is willing to “unlock” all the problems that the Previous Executive of the PP “frozen”.

Image result for andalusian parliamentHe stressed that Andalusia has a government and a president who “always raise their voices” in defense of the interests of this land with strength, strength and vigor, “above the party.”

Opposite, according to the president, is the PP-A and its president who “only worries about the date of the elections”, something he has been talking about for a year, without having contributed anything else to the community. Susana Díaz has referred to Moreno’s “year of suffering”, in that he has not “scratched the ball” and does not know “where he is”.

Also, he has reproached him for one day criticizing Ciudadanos (Cs) and the other prays to see if he joins them after the regional elections and “the accounts come out.” In his opinion, Moreno is now a “peephole in the fight” held by Pablo Casado and Albert Rivera, “oblivious to the interests of this land” and is not able to see what the Andalusian Government is doing.

Regarding the fact that Moreno has demanded that he present the Andalusian Budgets for 2019, the president has ironized with the fact that these days he has come to offer to negotiate those accounts. “It happens to him as bad students, as he has not done anything in three and a half years, now he is only worried about the exam date,” he said.

As for the PP-A president’s accusations of “covering up corruption in the community,” such as the use of credit cards in the now-defunct Faffe, the president has indicated that the PP-A has not been able to find “a single macula” to his Government, although he has tried everything and has tried to “sow shadow”.

“He has not been able to find the slightest error or absolutely nothing that the Government does not feel proud of,” Susana Díaz said to Juanma Moreno. “His nervous breakdown responds to that and he has to resort to issues of ten and fifteen years ago and that the Board took to court and are being investigated,” he said.


Image result for electionsFor his part, Moreno has denounced that while Pedro Sánchez has become a “problem” for all Andalusians, with “failure after failure, with rectification after rectification and with lurch after lurch” of his Government, as has been seen before migratory crisis and the issue of the workload in Navantia, the Andalusian Executive is set to “play with the date of elections” and the “stability” of this community.

After alerting of the “destruction” of employment during the somewhat more than one hundred days of the Government of Sanchez and the news that arrives on the cooling of the economy, Moreno has criticized that the PSOE-A and Citizens are “playing with political instability and institutional “, with economic consequences for all Andalusians.

She has told Susana Diaz that the national president of Cs, Albert Rivera, has had to come to Andalusia to tell him that there will be “early elections in the fall”, which is “surprising”. He has demanded that the president stop “playing with the stability of Andalusia” and that she start working by bringing to Parliament the Budget for 2019 and to look for “sufficient consensus” so that she can move forward, because that is “her responsibility and obligation “.

For Moreno, this has been a “blank” legislature, due to the “anxiety” of Susana Díaz “to cover the inability” of her Government’s management and the “corruption”. He has said that the PSOE-A and the president “tremble” with the possibility of knowing everything that happened with the public money that was handled in the extinct Faffe.

He expressed his conviction that Susana Díaz “will not consent” that the Faffe commission of inquiry be launched in Parliament, thus preventing “outlets, waste or irregular contracts” from coming to light. the expenses in celebrations, meals, hotels and up to 15,000 euros in a brothel, “paid by all the Andalusians”. It has indicated that this last fact is “reprehensible from the administrative, political, and moral point of view”, which should force the president, as a woman, to react instead of remaining “silent”.

Also, he has alluded to the PSOE-A’s concern about the “sword of Damocles that is the ruling of the case of the ERE, which calls into question the management of socialist governments of 20 years.”

He has warned the president that, at the end of his term, he will move on to “history to cover up corruption” and to the “social and economic setback” in Andalusia. He has told him that stability in the community depends on one thing: “to think about Andalusia and the Andalusians for once in life and not think about you”.