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New Zealand Dollar Update

New Zealand Dollar Update

Old Nov 6th 2007, 7:59 am
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Default New Zealand Dollar Update

As per my update on the Australian Dollar, again you might find this useful:


The Kiwi Dollar finished the month where it started, around the 2.70 level, but that is not to say that it has not been volatile throughout the month! In fact, there has been over a 16 cent difference between the high (2.7750) and the low (2.61), once again indicating that the effects of the credit crunch are being felt and that the NZD’s fate is heavily influenced by equity markets and risk appetite.

Risks to the economy remain finely balanced and, after CPI figures came out at 0.5% (the lowest figures in 3 years), the RBNZ left their interest rates on hold at 8.25%. Potential inflationary pressures from strong commodity prices and a tightening labour market were cited, but there are also signs that the housing market appears to be moderating.

It is also worth reiterating why the market moved so much in August. Simply put, the sub-prime mortgage lending crisis in the US (which filtered through to the UK with the much publicised Northern Rock issue), caused massive uncertainty in the equity and money markets. Investors got scared, took their profits from the carry-trades, and there was a big sell off of the New Zealand dollar, hence the moves up to 2.97. Once the initial impact of the sub-primes had been felt, investors came back into the market and started buying these dollars again, (with the high interest rates offering very attractive gains) thus strengthening the NZD and moving it back to the mid 2.60’s – 2.70 levels we are seeing now.

It is very hard to predict where the market is going from here - we haven’t as yet seen a move back down to the July ’07 lows of 2.54, but some analysts believe we are in a period of correction or consolidation, and the longer terms risks are for more downward movement in the months ahead. The question is how low can it go? The simple answer is nobody can predict these moves, but there are steps you can take to protect yourself against these currency fluctuations and eliminate the risk of the markets moving against you. When migrating, it is paramount to ensure you are aware of these market movements and any significant trends developing, because the transfer of your funds from £ to $NZD will have a massive impact on your future wealth.

The most important thing is to gain an understanding of what this means to you; if you were taking £200,000, and moved your money on the 23rd July, you would have got just around $508,000 NZD. Less than 2 months later, on 10th September, the same £200,000 would have bought over $594,000, which is a staggering $86,000 more!!

So how can you protect yourselves against such volatility? Nobody has a crystal ball, but if you have funds available to you then you can fix a rate of exchange with just a 10% deposit. You then set a date for up to 2 years in the future to send the remainder of your funds, which are all paid at the pre agreed rate of exchange. This is known as a forward contract, or a buy now, pay later option, and eliminates any risk of the market moving against you and means that you know exactly how many Kiwi Dollars you will have to start your new life abroad. It can be done for all, or a portion of your funds, depending on what you have available to you.

Should you be in the fortunate position to have all or the majority of your funds available to you, then you can always buy your NZD on a spot contract, or buy now, pay now basis. As it sounds, you buy your currency now, and pay for it now, and we will then send your funds to an account of your choice in New Zealand (if you do not have an account set up then we can assist with this as well). Again you have peace of mind in the knowledge that you are protecting yourself against any currency fluctuations, but you are also taking advantage of the high interest rates down in NZ.

Many people will think about leaving their funds in the UK, as they may be renting 12 months. However, 12 months ago it was around 2.90, so the question you need to ask yourselves is what risk am I willing to take, or how much can I afford to lose?

There is no right or wrong answer, it is a very personal decision and only you can answer it. If you are a gambler and can afford to take the risk of the market moving against you, then you may decide to wait. If you want to know how many dollars you will have and how much your house in New Zealand will cost you, then you may decide to take the steps to protect yourself against these movements. Whatever the outcome, the most important thing is to start following the markets and speaking to the experts. Whether you are a week, a month, or a year from emigrating, forward planning will make your move a lot easier and more stress-free.

Cheers,

Richard.
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Old Nov 6th 2007, 8:05 am
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Default Re: New Zealand Dollar Update

As long as it stays strong against the greenback then it should help keep the Petrol Price down against the effects of the increasing Oil Price.

If the US$ starts getting stronger against the Kiwi then watch out the price rises of recent wekks wont be nothing in comparrison.
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Old Nov 6th 2007, 8:06 am
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Default Re: New Zealand Dollar Update

Thanks

I was hoping for a crystal ball answer though.
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Old Nov 6th 2007, 9:03 am
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Default Re: New Zealand Dollar Update

Are you touting for business Richard?

Kip
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Old Nov 6th 2007, 4:21 pm
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Default Re: New Zealand Dollar Update

Originally Posted by Kippers View Post
Are you touting for business Richard?

Kip
Kip,

If you would like to discuss your situation in more detail then we would, of course, be more than happy to talk to you, but I thought it would be beneficial to all those worried about the rates of exchange to post an update on the NZ Dollar.

Regards,

Richard.
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Old Nov 7th 2007, 5:07 am
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Default Re: New Zealand Dollar Update

Originally Posted by Windsor2 View Post
Kip,

If you would like to discuss your situation in more detail then we would, of course, be more than happy to talk to you, but I thought it would be beneficial to all those worried about the rates of exchange to post an update on the NZ Dollar.

Regards,

Richard.
I just opened up a US$ account here so we can get our money out of the US without being killed by the exchange rate (right now at least ).
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Old Nov 7th 2007, 5:33 am
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Default Re: New Zealand Dollar Update

Originally Posted by Maz View Post
I just opened up a US$ account here so we can get our money out of the US without being killed by the exchange rate (right now at least ).

From what I've read over the last year, the US dollar is heading in only one direction.

Kip
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Old Nov 7th 2007, 6:34 am
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Default Re: New Zealand Dollar Update

Originally Posted by Kippers View Post
From what I've read over the last year, the US dollar is heading in only one direction.

Kip
Yeah me too Kip, but that's starting to worry me though - when EVERYONE is USD bearish I might be inclined to think the big Wall Street vultures will engineer a USD rally, probably aided and abetted by their cronies at the Fed when the time is just right to trash all the short positions(!) - the COT report shows the big commercials are massively LONG the USD - they normally set up the market moves so I'm getting nervous! That being said the USDJPY is headed south again today - christ where's my crystal ball?!!!!!!

BTW mate, seen the gold price lately? HEEHEE!!!!!!!!!

Dave
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Old Nov 7th 2007, 6:42 am
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Default Re: New Zealand Dollar Update

Originally Posted by Paladin View Post
Yeah me too Kip, but that's starting to worry me though - when EVERYONE is USD bearish I might be inclined to think the big Wall Street vultures will engineer a USD rally, probably aided and abetted by their cronies at the Fed when the time is just right to trash all the short positions(!) - the COT report shows the big commercials are massively LONG the USD - they normally set up the market moves so I'm getting nervous! That being said the USDJPY is headed south again today - christ where's my crystal ball?!!!!!!

BTW mate, seen the gold price lately? HEEHEE!!!!!!!!!

Dave

Speak English Dave!
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Old Nov 7th 2007, 6:59 am
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Originally Posted by donnaf View Post
Speak English Dave!

do I have to?
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Old Nov 7th 2007, 7:11 am
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Default Re: New Zealand Dollar Update

Originally Posted by Paladin View Post
Yeah me too Kip, but that's starting to worry me though - when EVERYONE is USD bearish I might be inclined to think the big Wall Street vultures will engineer a USD rally, probably aided and abetted by their cronies at the Fed when the time is just right to trash all the short positions(!) - the COT report shows the big commercials are massively LONG the USD - they normally set up the market moves so I'm getting nervous! That being said the USDJPY is headed south again today - christ where's my crystal ball?!!!!!!

BTW mate, seen the gold price lately? HEEHEE!!!!!!!!!

Dave
I'm pretty sure the US no longer has any control over the dollar's value,......... that power now lies elsewhere in the world.

That being said, I'm sure the Chinese and Japanese etc, would love to see it up again. They're losing big time holding those Treasuries.

Ah yes gold.
Mr. B Sprout will say it has only risen v the US$

Kip
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Old Nov 7th 2007, 7:59 am
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Default Re: New Zealand Dollar Update

Originally Posted by Kippers View Post
I'm pretty sure the US no longer has any control over the dollar's value,......... that power now lies elsewhere in the world.
Theres some truth in that for sure!
Originally Posted by Kippers View Post
That being said, I'm sure the Chinese and Japanese etc, would love to see it up again. They're losing big time holding those Treasuries.
YEP for sure!!!

Originally Posted by Kippers View Post
Ah yes gold.
Mr. B Sprout will say it has only risen v the US$

Kip
He'd be 100% wrong but then again he wouldn't bother to go look at the charts of gold in euros or sterling would he LOL!
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