GBP/NZD Update
Nov 5th 2008, 8:15 am
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GBP/NZD Update
As requested by a number of BE regulars here's a brief update on what's happening in the currency markets.
The National Bank of New Zealand’s monthly business outlook survey showed its sentiment rose to a net 1.6% of people expecting the economy to improve over the next 12 months – boosted by lower petrol prices, interest rates and pending tax cuts.
We then saw the NZD collapse in value as global investors rushed to exit the carry trade, along with every other ‘risky’ investment such as stocks and commodities. GBP/NZD then saw the effects as investors with a ‘seesaw’ risk appetite drove demand for the high yielding NZD. This turmoil over the troubled markets overshadowed figures showing a modest rise in August retail sales, however the consumer spending remained low – backing views that the Central Bank will cut interest rates further,
NZD was then pushed higher towards the end of the month as investor focus returned to the looming global recession and stock market weakness – prompting increased ‘risk aversion’ and a sell off of the NZD. This erased the previous gains after New Zealand’s Central Bank slashed interest rates by a record 1.0% on Thursday and said further cuts were in the pipeline as the global financial threatens. The move followed a round of rate cuts by Central Banks around the world earlier in the month and brings the official rate to 6.50%, the lowest since January 2005.
Going forward most industry analysts expect continued volatility. No surprises there!
Whilst FX isn't the most thrilling of subjects, as soon as you make the decision to emigrate you should begin thinking about your foreign exchange requirements. The sooner you begin to think about your money transfers, the more likely are to make your money go as far as you do.
Best Regards
Mark Bodega
Director - HiFX
The National Bank of New Zealand’s monthly business outlook survey showed its sentiment rose to a net 1.6% of people expecting the economy to improve over the next 12 months – boosted by lower petrol prices, interest rates and pending tax cuts.
We then saw the NZD collapse in value as global investors rushed to exit the carry trade, along with every other ‘risky’ investment such as stocks and commodities. GBP/NZD then saw the effects as investors with a ‘seesaw’ risk appetite drove demand for the high yielding NZD. This turmoil over the troubled markets overshadowed figures showing a modest rise in August retail sales, however the consumer spending remained low – backing views that the Central Bank will cut interest rates further,
NZD was then pushed higher towards the end of the month as investor focus returned to the looming global recession and stock market weakness – prompting increased ‘risk aversion’ and a sell off of the NZD. This erased the previous gains after New Zealand’s Central Bank slashed interest rates by a record 1.0% on Thursday and said further cuts were in the pipeline as the global financial threatens. The move followed a round of rate cuts by Central Banks around the world earlier in the month and brings the official rate to 6.50%, the lowest since January 2005.
Going forward most industry analysts expect continued volatility. No surprises there!
Whilst FX isn't the most thrilling of subjects, as soon as you make the decision to emigrate you should begin thinking about your foreign exchange requirements. The sooner you begin to think about your money transfers, the more likely are to make your money go as far as you do.
Best Regards
Mark Bodega
Director - HiFX
