Analysis at the height of the crisis suggested that had the eurozone broken up, a neue deutsche mark
would have gone up at least 40 percent and probably more.
For example, if our Nigerian company owes the German supplier DM10m and is concerned that the deutsche mark
may strengthen against the naira or the dollar before payment is made, it will buy the deutsche mark
at the spot rate today.
All other currencies devalued against the deutsche mark
The dealer cannot convert the deutsche mark
liability embedded in the swap into a U.
This would effectively have resulted in an upward revaluation of the German currency and would have automatically devalued the euro against the deutsche mark
, thereby allowing the peripheral eurozone countries to achieve growth and debt repayment without the crushing austerity that has now driven unemployment to record levels.
The Deutsche mark
was a symbol of West German stability and economic strength in the decades after World War Two and former Chancellor Helmut Kohl struggled to convince the public of the benefits of the euro in the 1990s before its introduction.
For the Deutsche Mark
-to-dollar spot market as a whole, the authors find that net dollar purchases of $1 billion increase the Deutsche Mark
price of a dollar by about one pfennig.
The Deutsche mark
has become the de facto "pan-European" lead currency during the past 20 years.
dollar, but against the Deutsche mark
and the Swiss franc.
This study tests that hypothesis by examining the causality (in the Granger sense) of the deutsche mark
and West Germany's trade balance during the current floating exchange rate regimes.
The shift to the deutsche mark
facilitated a parallel shift in accounting systems.
Soros bet successfully that the pound was overvalued against the deutsche mark
in 1992, culminating in the so-called Black Wednesday when British Prime Minister John Major was forced to pull the currency out of the European Exchange Rate Mechanism (ERM).