With the New Zealand General Election on Saturday, this update looks at factors that could affect NZD exchange rates this week. The table below shows the difference you could have received when converting £200,000 Pounds to New Zealand Dollars at the high compared to the low over the last month.

Currency Pair% ChangeDifference on £200,000
GBPNZD6.1%NZD $22,908

NZD strengthened on higher price for milk products

The New Zealand Dollar strengthened against its major counterparts during the day yesterday following from the GDT (Global Dairy Trade) Price Index coming in with an increase of 0.9% compared to the previous auction 2 weeks ago. The GDT Price Index is the average percentage change of the price of milk products, and as this is New Zealand’s largest export, when this price rises generally speaking so does the value of the Kiwi.

Overnight tonight will see the release of GDP (Gross Domestic Product) figures for New Zealand for the 2nd quarter of 2017. GDP is a measure of growth and provides an insight into the health of an economy. Expectation is for an increase from 0.5% to 0.8% and if this is the case, we could see the NZD strengthen further.

New Zealand General Election update

New Zealand General Election update

However, with just days to go until New Zealander’s take to the polls for the General Election taking place on Saturday, this week is set to be a particularly volatile period for New Zealand Dollar exchange rates.

The vote is currently too close to call, with the two main opinion polls contradicting one another, and an average of the two has the major parties (the Labour Party and the National Party) on level pegging at 42%.

It has been noted that whenever the Labour Party take the lead in polls, the Kiwi Dollar has fallen, however when the current Government, the National Party, edged forwards last week the Kiwi strengthened.

General Elections have the capacity to create a huge amount of volatility on the currency markets, especially one where there is no clear front runner. Investors generally view a change of Government as being high risk and a step into the unknown, and therefore move their funds out of the currency in question when the outcome is so uncertain.

With this in mind, I would recommend any clients with a New Zealand Dollar requirement to get in touch with your Account Manager here on 01494 725353 so that we can keep you informed on market movements, whilst helping you to trade at the best possible time.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.