This New Zealand Dollar report will address the factors that are likely to affect exchange rates in the short term if you are buying abroad or making a currency transfer. The below table displays the difference in NZD you would have achieved when buying £200,000 over the past month.
|Currency Pair||% Change||Difference on £200,000|
As the table showing currency movements shows, the New Zealand Dollar has been one of the major winners in the currency markets over the past month.
Interest rate cuts have been avoided, a resurgence in regional demand for Kiwi goods sparked by a stabilising China and an Australia experiencing accelerated growth has sparked optimism in the New Zealand economy and therefore the Dollar.
We may also see this optimism translate into real, tangible figures for performance tonight with the release of New Zealand’s most recent growth figures. Growth for the first quarter of this year, (up to March), is expected to almost double from 0.4%-0.7%. Not big numbers on paper, but these represent hundreds of millions in new revenue. So this should be New Zealand Dollar positive, increasing its expense for anyone holding Sterling.
However, the picture gets cloudier on the prospects for New Zealand Dollar buyers with the announcement of the US interest rate decision. This will hit the wire just under five hours prior to New Zealand’s growth data.
US interest rates have a strong influence on the value of the New Zealand Dollar and Australian Dollar alike. In a world of relatively weak global growth, returns on currency investments are sought after. The 1.75% offered on the NZD makes it an attractive commodity to global investors. The UK by comparison sits at a measly 0.25%.
However, with more stable currencies such as the US Dollar set to raise interest rates, some of that demand for the Kiwi can be heavily chipped at. Should the rate rise be confirmed, by looking at previous rate rises you can likely anticipate a reduction in the New Zealand Dollars value.
Given that this hike will be happening outside of trading hours, anyone looking to take advantage of any spikes which occur before this contrasting growth data comes out, may wish to deploy a limit order. This will allow you to secure your NZD should a target rate of exchange be achieved in order to avoid missing out while UK markets are closed until the morning. I recommend speaking to your account manager here to explore your options fully.
For more information on how future data releases could affect your NZD requirement, call our trading floor on 01494 725 353 or email me here.
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