Impressive start to the year for the New Zealand Dollar

It has been a particularly strong start to the year for the NZD having made considerable gains over its major currency counterparts. In fact, NZD has forced the Pound into multi month lows having gained close to 4% since the 1st of January, providing NZD sellers an extra £12,000 on a $200,000 transfer.

Can the New Zealand Dollar maintain its January gains?

Of course, the uncertainty provided by Brexit has been at the heart of this sustained Kiwi strength however tomorrow’s RBNZ interest rate decision and subsequent monetary policy statement could have a big say on how the currency performs in the months ahead. Although the general consensus is that rates will be held at 1.75% as set in November, the RBNZ may well be tempted to go slightly lower in a bid to drive inflation.

Historically, the New Zealand Dollar has generally suffered in the later part of Q1 as investors shift their investments away from riskier commodity based currencies and into safer more stable options. As such, I expect to see short term buying opportunities for those selling Sterling to capitalise on. This could be further compounded by today’s global dairy trade auction price release. Given Dairy is one of New Zealand’s leading commodities, the projected slip in price due to increased competition from the US could help break sterling free.

Reasons for long term New Zealand Dollar optimism

Finance minister Steven Joyce confirmed he will be releasing this year’s budget on the 25th of May. With increased public spending and large investment in infrastructure planned, Joyce is intent on capitalising on New Zealand’s consistent growth over the past 10 years. Nearly 330,000 new jobs have been created since 2008 with the average wage having risen at double the rate of inflation, Joyce believes now is the time to strike. Solid re-investment into the country with strong financial backing will more than likely strengthen the New Zealand Dollar in the long run.

If you are a NZD seller with a currency requirement, why not contact your account manager at FCD who can help you go over the implications of your transfer going forward. Call us on 01494 725 353 today!


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