NZ dollar peaks yet again
The New Zealand dollar this morning came of Friday night's record high but is still running above 83USc.
The New Zealand dollar this morning came of Friday night’s record high but is still running above 83USc.
The rise is less about the strength of New Zealand’s economy - although the continued high-performing farming sector is a positive factor - and more about the serious weaknesses in the large northern hemisphere economies.
“This is about a battle over who is the ugliest duckling, between the EU and the US right now,” said Bank of New Zealand currency strategist Mike Burrowes.
The rise followed unexpectedly bad economic data in the United States – non-farm payroll figures were much worse than anticipated – “a real shocker”, Mr Burrowes said.
That suggests the US economy is not recovering as strongly as was thought and, against the backdrop of continued political ducks and drakes about the country’s debt ceiling, saw investors take fright to safer havens.
The currency hit a record 83.85USc on Friday night but has come back and is hovering at around 83.83USc now, he said, but this is still very high.
Over the medium term, the New Zealand dollar is still “very very over-valued,” he said.
“But for now, the momentum is flowing the other way.”
The Bank of New Zealand revised its currency forecasts just before the US volatility on Friday and is still predicting and eventual drop of the high US/New Zealand dollar cross rate, but continued volatility.
The message for investor is that “for now expect NZD/USD to remain volatile as EU political leaders debate possible solutions to the Greek debt crisis.
"Our view is that any spikes in risk aversion stemming from the European debt crisis are likely to be short lived as EU political leaders have shown there resolve to do all that is necessary."
Rob Hosking
Mon, 11 Jul 2011
Mon, 11 Jul 2011
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NZ dollar peaks yet again
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