Currency talk: Where's the dollar heading now?
Capital Economic's Paul Dales and NBR's Jason Walls break down the biggest currency news. With special audio.
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Last week saw the kiwi dollar jump dramatically against the greenback after comments from the US Federal Reserve and upbeat local GDP data.
The kiwi jumped from just over 65c on Wednesday last week to close to 69c a few days later.
Capital Economics chief Australia and New Zealand economist Paul Dales says there appears to have been a rebound in sentiment, which has seen a lot of the commodity currencies around the world losing value.
“These currencies were clobbered at the beginning of the year when everyone was worried about the outlook in China,” he says.
The kiwi dropped almost 5c against the greenback in the first few weeks of the year.
“But as those fears have faded, the commodity currencies have started to climb back again,” Mr Dales says.
But he says the kiwi won’t be up at its current high levels for too much longer.
“We think that the US Fed will hike interest rates faster than most people are anticipating. So, in the second half of the year, we could be talking about the reverse of the story we have just discussed, and the New Zealand dollar will weaken,” he says.
Although it’s hard to know exactly which direction the foreign exchange markets will head, Mr Dales says “our view is that the fundaments will turn in the second half of this year and weaken back to below 65c, perhaps even to 60c against the US dollar.”
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Tue, 22 Mar 2016
Tue, 22 Mar 2016
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Currency talk: Where's the dollar heading now?
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