Germany to raise about EUR350 bln in new debt to finance stimulus measures amid coronavirus crisis – Reuters
|Citing unnamed government sources on Saturday, Reuters reported that the German Finance Minister Olaf Scholz reportedly said the debt ceiling will be raised to include a supplementary government budget of EUR156 billion (bln).
The sources said that the government's stimulus package will include EUR100 bln for economic stability fund, EUR 100 bln in credit to the development bank, KFW, for loans to businesses.
Further, there will be EUR400bn in loan guarantees, totaling up the package toEUR750 bln.
With the new stimulus package, Germany will defy its fiscal rulebook, as the government seeks to support and stabilize the market in fighting the coronavirus pandemic.
EUR/USD reaction
The shared currency could be offered some reprieve by the fiscal stimulus measures likely to be announced, reviving the recovery in EUR/USD from the lowest levels since April 2017 reached on Friday at 1.0638.
Meanwhile, the greenback could meet further supply across its main competitors, as the Fed continues with its operation to ensure enough liquidity in the system. The funding stress in the market sent the US dollar index to over three-year highs of 102.99 last week.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.