A reduction in the production of dairy in New Zealand had led to a decrease in growth figures, coming out at 0.6% for the last quarter. This market report discusses how this could affect the NZD long term as dairy is New Zealand's main export. The table below shows the difference in NZD you could have achieved when buying £200,000.00 during the high and low points of the past 7 days.
|Currency Pair||% Change||Difference on £200,000|
The kiwi’s free fall continued this week as growth figures for the final quarter of last year came out far weaker than expected at 0.6% as a result of a deterioration in dairy production over the last few months. Dairy remains New Zealand’s leading export and a slowdown in the sector very often leads to a drop in the value of the Kiwi. The Pound is now hovering just below the 1.92 level which is proving to be a defining residence point so far this year.
The drop in growth further compounds the New Zealand dollar’s woes. It has continued its political struggles that have seeped through from the back end of last year.
The drop in growth further compounds the New Zealand dollar’s woes. It has continued its political struggles that have seeped through from the back end of last year. Evidently the markets are holding out for more clarity regarding the new labour government’s plans for a ban over foreign investment and increased taxes within the housing market in a bid to cool fears of continuously rising household debt.
The combination of this political uncertainty and a slowdown in growth further justifies the Reserve Bank of New Zealand’s commitment to keeping interest rates at record lows of 1.75 for the foreseeable future and is unlikely to draw investor confidence back into the Kiwi.
The last time the RBNZ commented on its monetary policy, they highlighted the importance for inflation to return to sustainable levels before the question marks can begin to surface again.
Monday evening may provide a nudge in the right direction, with the Westpack consumer survey release that is often used by the reserve banks as a precursor to gauge inflation levels later down the line. If the feedback is positive then there is a chance this could sway the mood for the next interest rate meeting for the RBNZ set for the 22nd. As a result, if you are looking to buy New Zealand dollars it may pay to plan before Monday evening to make the most of current levels in case the markets once again knock sterling back to the low 1.90’s
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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