30 July 2013 Exchange Rate Perspectives: FX and the Financial Transaction Tax FX Behavioral and Fundamental Equilibrium Exchange Rates (BEER and FEERr Figure I: USD.croas BEER and FEER valuations 40 29 30 20 0 16 1110 19 14 10 ..1 8 24j 20 23 11 J 7 i l wir l .; A ; I 1 C 1 4 : I -41. 11112 4 40 4 .T14 1 i -10 -5 4 4 -11 -11 -11 42312 -1343 -14 -20 -15 -21 -30 -213 40 V O V PI 5 . - 1 8 ec .. 6 J eg QCC 2, - Savoie te IX Research o z at BEER FEER 17 ut 24 21 22 f -28 3 ZS Rs g el 2 ... e [Figure 2: EUR/USD is a bit expensive vs. BEER FV [Figure 3: USD/JPY is now above fair value vs. BEER FV 1.8 1.6 1.4 1.2 1.0 0.8 EUR BEER Fair Value —Spot 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 Snow 08 AC Ream. 'Figure 4: GBP/USD Is very undervalued vs BEER IV 2.0 1.5 -• 1.0 BEER Fair Value Spot 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 Sara as PX1tasperA 300.0 250.0 • 200.0 150.0 100.0 50.0 PY BEER Fair Value —Spot 8082848688909294969800020406081012 sans D8 a Mast. (Figure 5: USD BIS TWI is fair value vs. BEER FV 140.0 130.0 120.0 110.0 100.0 90.0 80.0 BEER Fair Value 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 j ken 00/ixftwant, 1 'Sources: BIS, Bloomberg, Deutsche Bank Notes: For details on model, see Exchange Rate Perspectives, Jan-13. BEER model as relative PPP adjusted for terms-of-trade and productivity effects. Relative FEER model is based on current account surplusesideficits relative to longterm (structural) surpluses/deficits. Over/undervaluation calculated off TWIs and converted to USD-crosses using matrix algebra. EM graphs available upon request Deutsche Bank Securities Inc. Page 21 CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0104534 SONY GM_00250718 EFTA01449221