Changes in Underlying Parameters

Changes in the underlying parameters relate primarily to currency exchange rates and the interest rates used to calculate pension obligations.

The exchange rates for major currencies against the euro varied as follows:

Exchange Rates for Major Currencies

 

 

 

Closing rate

 

Average rate

€1

 

 

Dec. 31, 2016

Sep. 30, 2016

Sep. 30, 2017

 

9M 2016

9M 2017

BRL

Brazil

 

3.43

3.62

3.77

 

3.94

3.52

CAD

Canada

 

1.42

1.47

1.47

 

1.47

1.45

CHF

Switzerland

 

1.07

1.09

1.15

 

1.09

1.09

CNY

China

 

7.35

7.45

7.85

 

7.35

7.55

GBP

United Kingdom

 

0.86

0.86

0.88

 

0.80

0.87

JPY

Japan

 

123.36

113.08

132.89

 

120.85

124.36

MXN

Mexico

 

21.78

21.72

21.45

 

20.38

20.97

RUB

Russia

 

64.30

70.56

68.28

 

75.96

64.74

USD

United States

 

1.05

1.12

1.18

 

1.12

1.11

The most important interest rates used to calculate the present value of pension obligations are given below:

Discount Rate for Pension Obligations

 

 

Dec. 31, 2016

 

June 30, 2017

 

Sep. 30, 2017

 

 

%

 

%

 

%

Germany

 

1.80

 

2.00

 

2.00

United Kingdom

 

2.65

 

2.60

 

2.70

United States

 

3.70

 

3.50

 

3.40

The data selection criteria used to determine the discount rate in the eurozone were modified as of the beginning of the third quarter of 2017 in connection with the deconsolidation of Covestro. As before, the underlying bond portfolio consists entirely of high-quality corporate bonds with a minimum AA or AAA rating. Corporate bonds of state-owned companies are no longer included. Included in the bond portfolio were corporate bonds of special purpose entities and exchange-traded corporate bonds. Without the modifications, the interest rate as of September 30, 2017, would have been 20 base points lower. The provisions for pensions would have been €0.6 billion higher as a result.