Exchange rates and interest rates

Exchange rates

Table 1 shows the annual average exchange rates between the euro and a selection of European currencies, as well as the Chinese renminbi-yuan, the Japanese yen and the United States dollar, between 2013 and 2023. The development of these exchange rates is also shown in the four different charts (Figures 1a–1d) that make up Figure 1, where the currencies are grouped together according to the magnitude of their various exchange rates against the euro. Non-euro area Member States may fix their exchange rates against the euro as part of the exchange rate mechanism (ERM II) in preparation for joining the EA, and this explains some of the very stable euro exchange rates. The current members of ERM II are Bulgaria (since 10 July 2020) and Denmark (since 1 January 1999). This article refers to data up to 2023.

Table 1: Exchange rates against the euro, 2013–2023
(1 EUR = … national currency)
Source: Eurostat (ert_bil_eur_a), European Central Bank (ECB)

Focusing on the exchange rates of non-euro area Member States, between 2013 and 2023 the euro appreciated most strongly against the Swedish krona (32.7 %), the Hungarian forint (28.6 %), the Romanian leu (11.9 %) and the Polish zloty (8.2 %). The euro had an overall depreciation of 0.1 % against the Danish krone and a depreciation of 7.6 % against the Czech koruna. The exchange rate between the euro and the Bulgarian lev was unchanged during the period under consideration as the lev has been pegged to the euro since its launch in 1999.

In Figures 1a-1d, exchange rates against the euro for 2013–2023 are shown for the countries listed in Table 1. The countries are grouped in the different figures (1a-1d) depending on their national currency’s exchange rate against the euro in 2023. Different scales are used for the y-axes in each part. A fall in the exchange rate shows an appreciation in the value of the national currency and a depreciation in the value of the euro.

Figure 1a: Exchange rates against the euro, 2013–2023
(1 EUR = … national currency)
Source: Eurostat (ert_bil_eur_a), European Central Bank (ECB)

Figure 1a shows the development of the euro against the (British) pound sterling (GBP), the Swiss franc (CHF), and the United States dollar (USD).

Overall, the euro appreciated 2.4 % against the pound sterling over the period 2013–2023. This change reflected falls in the value of the euro in 2014, 2015, 2019, 2021 and 2022, which collectively had a lower impact than the increases in the value of the euro in the other years. There was a particularly volatile period in 2015 and 2016, with a large depreciation of the euro against the pound sterling in 2015 (down 10.0 %) followed by a large appreciation in 2016 (up 12.9 %).

The euro depreciated 21.1 % against the Swiss franc between 2013 and 2023. The euro fluctuated slightly against the franc between 2013 and 2014, followed by a steep fall in 2015 (down 12.1 %). Despite modest appreciations in the value of the euro in 2016, 2017, 2018 and 2021, further depreciations in 2019, 2020, 2022 and 2023 also contributed to its depreciation over the period.

The euro depreciated 18.6 % against the United States dollar between 2013 and 2023. Initially the euro was almost unchanged in 2014, while in 2015 there was a sharp depreciation in the value of the euro against the United States dollar (down 16.5 %). Thereafter, developments were irregular, with the euro appreciating in 2017, 2018, 2020, 2021 and 2023, but depreciating in 2019 and notably in 2022 (down 11.0 %).

Figure 1b: Exchange rates against the euro, 2013–2023
(1 EUR = … national currency)
Source: Eurostat (ert_bil_eur_a), European Central Bank (ECB)

Figure 1b shows the development of the euro against the Bulgarian lev (BGN), the Polish zloty (PLN), the Romanian leu (RON), the Danish krone (DKK) and the Chinese renminbi-yuan (CNY).

The exchange rate between the euro and the Bulgarian lev was unchanged during the period under consideration as the lev has been pegged to the euro since its launch in 1999. Between 2013 and 2023, the euro appreciated quite strongly against the Polish zloty, up 8.2 %. During the period under consideration, the euro was stable or appreciated against the zloty in all years except 2014 (down 0.3 %), 2017 (down 2.4 %) and 2023 (down 3.1 %).

The euro appreciated strongly against the Romanian leu, up 11.9 % between 2013 and 2023. The euro was stable or appreciated against the leu in all years.

Since 1 January 1999, Denmark has been a member of the ERM II. Its currency, the Danish krone, has been pegged to the euro with a band allowing fluctuations of +/-2.25 %. Over the time period 2013–2023, there were only minor changes in this exchange rate, with increases or decreases of the euro in the range of -0.2 % to 0.2 % each year. Overall, the euro depreciated 0.1 % against the Danish krone.

The euro depreciated 6.2 % against the Chinese renminbi-yuan between 2013 and 2023. The euro depreciated strongly against the renminbi-yuan in 2015 (down 14.8 %) and 2022 (down 7.2 %) and more moderately in 2019 and 2021. In all other years, the euro appreciated against the Chinese renminbi-yuan.

Figure 1c: Exchange rates against the euro, 2013–2023
(1 EUR = … national currency)
Source: Eurostat (ert_bil_eur_a), European Central Bank (ECB)

Figure 1c shows the development of the euro against the Norwegian krone (NOK), the Swedish krona (SEK), the Moldovan leu (MDL), the Czech koruna (CZK), the Turkish lira (TRY) and the Ukrainian hryvnia (UAH).

The euro appreciated 46.3 % against the Norwegian krone between 2013 and 2023. The euro’s developments against the Norwegian krone followed a general upward trend, interrupted in two years: the euro was stable or appreciated each year between 2014 and 2020; it depreciated in 2021 and again in 2022 before appreciating strongly (up 13.1 %) in 2023.

Among the national currencies of the EU Member States, the euro appreciated between 2013 and 2023 most strongly against the Swedish krona (up 32.7 %). This reflected appreciation during all years except for 2020 and 2021; the strongest appreciation was in 2023, up 8.0 %. The euro appreciated 17.3 % against the Moldovan leu over the period 2013–2023. This reflected relatively volatile movements. The euro appreciated in 2014, 2015 and 2016 (increasing by 11.3 %, 12.0 % and 5.6 %, respectively). Some of this appreciation was lost in the following three years (2017 to 2019) before the euro appreciated again in 2020 and 2021. The development again reversed, with the euro depreciating against the leu in 2022 and 2023.

The euro depreciated 7.6 % against the Czech koruna between 2013 and 2023. The exchange rate fluctuated over the period under consideration, generally by no more than +/- 3.1 %. A larger appreciation (up 6.0 %) was observed in 2014 while a larger depreciation (down 4.2 %) was recorded in 2022. The latter was one of three consecutive depreciations, with the euro falling 9.3 % against the koruna between 2020 and 2023.

Overall, the euro appreciated 916.8 % against the Turkish lira. There was a regular appreciation of the euro against the Turkish lira, with the euro appreciating every year between 2013 and 2023, most notably in 2022 (up 65.6 %) and 2023 (up 48.0 %).

The euro appreciated 272.5 % against the Ukrainian hryvnia between 2013 and 2023. During this period, the euro appreciated against the hryvnia every year except for 2019. The euro appreciated most strongly in 2015 (up 54.2 %) and 2014 (up 47.7 %). The 16.2 % appreciation in 2023 was the largest since 2016.

Figure 1d: Exchange rates against the euro, 2013–2023
(1 EUR = … national currency)
Source: Eurostat (ert_bil_eur_a), European Central Bank (ECB)

Figure 1d shows the development of the euro against the Macedonian denar (MKD), the Albanian lek (ALL), the Serbian dinar (RSD), the Icelandic króna (ISK), the Japanese yen (JPY) and the Hungarian forint (HUF).

During this period, there was little movement in the exchange rate between the euro and the Macedonian denar with an overall depreciation of the euro of 0.04 %. The Macedonian denar has been pegged (within a band of +/- 1 % of a central rate) against the euro since 2002.

Between 2013 and 2023, a depreciation of the euro was observed against the Albanian lek (down 22.4 % overall). The euro depreciated most years, with a slight appreciation in 2020. The largest depreciation was observed in 2023, down 8.6 %.

Overall, the euro appreciated 3.6 % against the Serbian dinar between 2013 and 2023. Developments of the euro’s exchange rate against the Serbian dinar followed three stages: the euro appreciated between 2013 and 2016; the euro depreciated in 2017 and 2018; the euro depreciated slightly (down at most 0.4 %) or was stable in the years from 2019 to 2023.

Over the period 2013–2023, the euro depreciated 8.2 % against the Icelandic króna. This reflected depreciations in two periods, from 2014 to 2017 as well as in 2021 and 2022. Between these periods (in 2018, 2019 and 2020) the euro appreciated as it did again in 2023 (up 4.8 %).

The euro appreciated by 17.2 % against the Japanese yen between 2013 and 2023. The exchange rate fluctuated with a broadly two-yearly rhythm, with depreciations of the euro in 2015 and 2016, appreciations in 2017 and 2018, depreciations in 2019 and 2020, and then appreciations in the three latest years. The largest appreciation of the euro during this period was recorded in 2023 (up 10.1 %).

The euro appreciated strongly against the Hungarian forint between 2013 and 2023 (up 28.6 %). This overall appreciation was accumulated over most of the period, as the euro appreciated against the forint every year apart from in 2017 (when it depreciated slightly, down 0.7 %) and 2023 (when it depreciated more strongly, down 2.4 %).

Interest rates

EU (weighted) average bond yields (see the explanatory notes for more information) were higher in 2023 than they had been in 2018 (see Figure 2). In the EU, bond yields in 2023 (3.51 %) were 2.13 percentage points higher than they had been in 2018 (1.38 %). The change for the EA was somewhat smaller, as bond yields in 2018 (1.12 %) were 2.02 percentage points lower than in 2023 (3.14 %). In relative terms, bond yields in the EU were 2.5 times as high in 2023 as in 2018, while the corresponding ratio for the EA was 2.8 times as high.

Between 2018 and 2023, yields increased in nearly all of the EU Member States for which data are available (no 2018 data are available for Estonia). Greece was the exception, as the yield fell from 4.19 % to 4.00 %, a decrease of 0.19 percentage points. Note that Greece had the second highest yields in 2018 among the Member States, reflecting in part the impact of the global financial and economic crisis and subsequent sovereign debt crisis; the high yields in Greece fell when the economic and financial situation stabilised before increasing again in the two most recent years. Elsewhere, bond yields increased between 2018 and 2023, most notably in Hungary (up 4.45 percentage points). In the remaining 24 Member States for which data are available, the yields increased in the range of 1.40 to 2.93 percentage points.

Hungary (7.51 %), Romania (6.71 %) and Poland (5.80 %) were the only EU Member States with bond yields that were above 5.00% in 2023. A total of eight Member States had yields below 3.00 %, among which Germany (2.43 %) had the lowest yield.

Figure 2: EMU convergence criterion bond yields (Maastricht criterion), 2018 and 2023
(%)
Source: Eurostat (irt_lt_mcby_a)

Figures 3 and 4 show three-month interbank rates. Money market rates, also known as interbank rates, are interest rates used by banks for operations among themselves. In the money market, banks are able to borrow and re-lend highly liquid assets between themselves.

Figure 3: Short-term interest rates – three-month interbank rates (annual average), 2013–2023
(%)
Source: Eurostat (irt_st_m)

Figure 3 shows a time series from 2013 to 2023 for these rates for four economies. During the period 2013–2016, interbank rates for the EA, the United Kingdom, Japan and the United States were consistently within the range of -1.00 to 1.00 %. In Japan, this was also the case for the whole of the time series shown in Figure 3, as well as in the EA from 2013 to 2022 and in the United Kingdom from 2013 to 2021. Three of these four economies – Japan being the exception – experienced relatively large increases in rates in 2022 and even larger increases in 2023. These increases in 2022 and 2023 in the EA, the United Kingdom and the United States were all considerably larger than the increases seen in any of the other years shown in Figure 3.

Average short-term interest rates (see the explanatory notes for more information) in the EA turned negative (-0.02 %) in 2015 and remained negative for the next six years. The 0.34 % rate recorded in 2022 was the first positive rate since 2014. In 2023, the rate in the EA increased rapidly to 3.43 %, by far the highest rate during the time period presented in Figure 3.

In the United Kingdom, short-term interest rates changed between 2013 and 2023 with a two-yearly rhythm, with increasing volatility. A marginal increase between 2013 and 2015 was followed by a slightly stronger decrease in 2016 and 2017, in turn followed by a stronger increase in 2018 and 2019 and a stronger decrease in 2020 and 2021. By 2021, the rate had fallen to 0.09 %. By far the largest increases were recorded in the next two years, with the rate increasing to 2.00 % in 2022 and 4.96 % in 2023.

The United States had an upturn in the interbank rate from 2014, with the rate rising for five consecutive years to reach 2.33 % in 2019. The rate in the United States fell sharply in 2020 (to 0.65 %) and fell further (to 0.16 %) in 2021. In 2022, it rebounded to 2.38 % before accelerating to 5.39 % in 2023.

By contrast, the developments in Japan were considerably more subdued than the three other economies presented in Figure 3. The rate declined from 0.15 % in 2013 to a range between -0.07 % and -0.08 % between 2019 and 2021, before increasing slightly to -0.02 % in 2022.

Figure 4: Short-term interest rates – three-month interbank rates (annual average), 2018 and 2023
(%)
Source: Eurostat (irt_st_m)

Figure 4 shows the same rates in the same markets but supplemented by information relating to non-euro area Member States. The SOFIBOR, the interbank rate in Bulgaria, was discontinued as of 01 July 2018 and therefore no data were compiled for either period (2018 or 2023).

In the EA, the interbank rate rose from -0.32 % in 2018 to 3.43 % in 2023. Interbank rates were higher in 2023 than in 2018 for all non-euro area Member States for which data are available. As in the EA, Denmark and Sweden also reported negative rates in 2018 and relatively low positive rates in 2023. In absolute terms, by far the largest percentage point increases between 2018 and 2023 among the non-euro area Member States was in Hungary, up 13.52 percentage points from 0.12 % in 2018 to 13.64 % in 2023. Elsewhere the increases ranged from 3.80 percentage points in Denmark to 5.86 percentage points in Czechia.

For comparison, the annual average of three-month interbank rate of the United Kingdom rose 4.24 percentage points between 2018 and 2023, while in the United States the increase was 3.08 percentage points. In Japan, interbank rates remained stable and close to zero, increasing 0.03 percentage points between 2018 and 2022.

Figure 5: Euro yield curve, 2013–2023
(%)
Source: Eurostat (irt_euryld_a), European Central Bank (ECB)

Figure 5 shows the euro yield curve between 2013 and 2023 for central government bonds with various years remaining to maturity.

• Yields were relatively high just before the onset of the financial and economic crisis in 2008 but fell thereafter. Bond yields for almost all maturities fell most years through to a low in 2016 before increasing somewhat in 2017 and stabilising in 2018.
• In 2019 and again in 2020, yields were once more at historic lows for almost all maturities, the only exceptions being for one or two years to maturity. In 2020, bonds with 29 or fewer years to maturity had negative yields while bonds with 30 years to maturity offered a yield of just 0.01 %.
• This trend shifted rapidly in 2021: bonds with 17 or fewer years to maturity had negative yields while bonds with 30 years to maturity offered a yield of 0.15 %.
• This development continued in 2022, as positive yields were observed for bonds for all maturities (up to 30 years). The yield for bonds with 30 years to maturity was 1.40 %, the highest yield for a bond with 30 years to maturity since 2014.
• In 2023, positive yields were again observed for bonds for all maturities (up to 30 years), with yields higher than in 2022 for all maturities. In fact, for bonds with 15 or fewer years to maturity the yields in 2023 were higher than those observed in any of the other years presented in Figure 5; for bonds with maturities of 16 years or more (up to 30 years), the yields in 2023 were higher than those observed in any of the other years except for 2013.
  • Unlike in other years, the highest yields observed in 2023 were for bonds with the shortest maturities, 3.16 % for bonds with one year to maturity.
  • The yields were progressively lower for longer maturities until reaching a low of 2.47 % for bonds with six years to maturity.
  • For bonds with a longer maturity (at least seven years and up to 30 years), the rates were quite similar, ranging between 2.48 % and 2.63 %.