This NZD update looks at factors that could affect exchange rates this week in order to help you stay informed if you need to make a currency transfer. For current live exchange rates visit our live currency rates page.
Last night the Reserve Bank of New Zealand decided to keep the official cash rate at 2.00%. The statement that followed noted that whilst the currency is so strong the inflation mandate given to the RBNZ is unachievable and this will force more easing, including another cut this year.
The GBP/NZD rate is at its lowest point since 2013, having fallen to levels lower than the drop after the referendum. The recent strength for the Kiwi can be attributed to still having one of the highest interest rates in the developed world which allows investors to hold funds their and gain interest.
The Kiwi strength has created cause for concern however for the RBNZ who are looking to cut the interest rate. However this creates a predicament as there is a housing boom taking place in Auckland with the average house price moving above $1m only 2 weeks ago. If the interest rate is cut, a mortgage costs less and therefore more people can purchase houses reducing the supply and increasing demand.
Whilst New Zealand imports more than it exports the two are relatively close and this is shown with only a small trade deficit. There is a danger that whilst the kiwi is strong the balance could widen as their exports become considerably more expensive.
If you do have a requirement to sell New Zealand Dollars I suggest getting in contact with your broker as the Reserve Bank is directly trying to weaken the currency. Locking in a rate using a forward contract could make sure you’re trading at the lows even if your funds aren’t available till a future date.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me at email@example.com.
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