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Will the reserve bank intervene?

Will the reserve bank intervene?

Old May 31st 2011, 2:32 am
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Default Will the reserve bank intervene?

Bill English has finally admitted that the strength of the kiwi has gotten too high. It has currently never traded so high since being floated in the 80s..

It is as yet unable (famous last words) to break the $2 resistance mark agin GBP it has been close to for a while. The reserve bank will apparently decide next week if it will interevene. It has done so once before and it achieved its goal.

I personally have decided to move our money to NZ after great thought and consideration as I don't believe it will ever return to anything we consider as 'good value'.

I said last week you would either have a real need or would have to be desparate to change just now but I accept that the money will earn another 60% in interest over here than what it does in the UK.

Whilst we do not need the money now I have concerns about the UK banking system and also with the UK govt. retail bank guarantee scheme.

I will leave holiday money there but will do a large exchange in the coming weeks what ever the rate. I will wait to see what happens next week to see if the kiwi sheds some strength.

I know its overvalued madly but I am concerned for the outlook in the UK, they say that they might look at putting rates up in Nov 2011 but who knows??

In the meant time the money in the UK earns **** all interest.

As I said life is fluid. How exciting!

I am fairly sick of wondering what to do. So as Nike says 'just do it'.

Watch the pound rise a few hours avo my transaction.
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Old May 31st 2011, 3:47 am
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Default Re: Will the reserve bank intervene?

I got like that Genesis. Got sick of thinking about what to do for the best and just bit the bullet.
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Old May 31st 2011, 4:22 am
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Default Re: Will the reserve bank intervene?

Originally Posted by BEVS View Post
I got like that Genesis. Got sick of thinking about what to do for the best and just bit the bullet.
Yeah, I think its time to move on and stop waiting for what may take a VERY long time... if ever for the kiwi to devalue to what we think it may be worth!!
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Old May 31st 2011, 4:40 am
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Default Re: Will the reserve bank intervene?

Gen, there is never a good time! I wish I had a crystal ball! Late last year, I had a large Euro bill to pay a supplier. In the 30 days, when I sold the products to when I was able to get paid myself, the NZ/Euro had dropped from 0.56 to 0.52, nearly wiping myself out of any profit.

Hand wringing about exchange rates can keep you awake at night, believe me I know.

Get it done.....Then its done and you can move on.
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Old May 31st 2011, 5:23 am
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Default Re: Will the reserve bank intervene?

Originally Posted by Catchafire View Post
Gen, there is never a good time! I wish I had a crystal ball! Late last year, I had a large Euro bill to pay a supplier. In the 30 days, when I sold the products to when I was able to get paid myself, the NZ/Euro had dropped from 0.56 to 0.52, nearly wiping myself out of any profit.

Hand wringing about exchange rates can keep you awake at night, believe me I know.

Get it done.....Then its done and you can move on.
You are so right!!
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Old May 31st 2011, 9:08 am
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Default Re: Will the reserve bank intervene?

Originally Posted by Genesis View Post
Yeah, I think its time to move on and stop waiting for what may take a VERY long time... if ever for the kiwi to devalue to what we think it may be worth!!
I think you're right. Looking at the historical exchange-rate graphs going back 10 years, the long term trend is for the Kiwi to keep strengthening against the pound. It's got to bottom out 'somewhere', 'sometime', but who knows where or when.
I returned to the UK to look after my frail 'ol Mum a couple of years ago, and changed all my NZ$ to GBP. Bad move! I would be well over £20k up if I'd left it until now to change it up. I've little doubt the rate will do a U-turn after I change it back again - sod's law.
The GBP is in a poor state, and just about all the recent fiscal reports by various Government depts have been painting an increasing picture of doom and gloom.
Have to agree with you Genesis, the Kiwi is waaay overvalued at present, and for no good reason that I can see,
Oh, for that crystal ball!
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Old May 31st 2011, 9:40 am
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Default Re: Will the reserve bank intervene?

Originally Posted by Rolfie View Post
I think you're right. Looking at the historical exchange-rate graphs going back 10 years, the long term trend is for the Kiwi to keep strengthening against the pound. It's got to bottom out 'somewhere', 'sometime', but who knows where or when.
I returned to the UK to look after my frail 'ol Mum a couple of years ago, and changed all my NZ$ to GBP. Bad move! I would be well over £20k up if I'd left it until now to change it up. I've little doubt the rate will do a U-turn after I change it back again - sod's law.
The GBP is in a poor state, and just about all the recent fiscal reports by various Government depts have been painting an increasing picture of doom and gloom.
Have to agree with you Genesis, the Kiwi is waaay overvalued at present, and for no good reason that I can see,
Oh, for that crystal ball!
I don't go with the trend idea. Its simply ups and downs. Trends are for clothes not the currency market! The dollar is overvalued as too many people want to buy it. The chinese want govt. bonds, they also want our farms. Others simply want to buy kiwi $s to sit in a kiwi bank account earning 5 times the interest what it would in there own bank in whatever country they hail from. The NZ govt has not entered into quantative easing (money printing)..that really screws the value of a currency. Loads of houses on the market equals cheaper price. When there is a ltd supply the price elevates...same with money I guess. Strong commodty prices are also apparently pushing up the kiwi (don't get that bit!).

Alas the kiwi has driven thru' the $2 mark. Who knows what will happen now.

BUT the shit is hitting the fan. Tourism will be knackered and those who export non dairy non meat non commodity stuff are well shafted. The strong kiwi is bad for NZ. It is holding back recovery and will cost jobs. Moreover what poor kiwi could afford to return to NZ with the rate as it is.

The only ones who do well are those shipping off to the US or the UK..by God they are minted. Good luck to them. I just wish it was the other way!!

It remains to be seen if Bollard will sell a large tranche of kiwi $s and effectivly flood the market with them driving the price down. He did it in 2007 and got the desired effect. I will wait till next week to see what happens. Of course we all know that the dollar next week will be going down the elevator shaft to 1.70 when I decide enough is enough. Who said life is fair??

Last edited by Genesis; May 31st 2011 at 9:43 am.
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Old May 31st 2011, 10:16 am
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Default Re: Will the reserve bank intervene?

Originally Posted by Genesis View Post
I don't go with the trend idea. Its simply ups and downs. Trends are for clothes not the currency market! The dollar is overvalued as too many people want to buy it. The chinese want govt. bonds, they also want our farms. Others simply want to buy kiwi $s to sit in a kiwi bank account earning 5 times the interest what it would in there own bank in whatever country they hail from. The NZ govt has not entered into quantative easing (money printing)..that really screws the value of a currency. Loads of houses on the market equals cheaper price. When there is a ltd supply the price elevates...same with money I guess. Strong commodty prices are also apparently pushing up the kiwi (don't get that bit!).

Alas the kiwi has driven thru' the $2 mark. Who knows what will happen now.

BUT the shit is hitting the fan. Tourism will be knackered and those who export non dairy non meat non commodity stuff are well shafted. The strong kiwi is bad for NZ. It is holding back recovery and will cost jobs. Moreover what poor kiwi could afford to return to NZ with the rate as it is.

The only ones who do well are those shipping off to the US or the UK..by God they are minted. Good luck to them. I just wish it was the other way!!

It remains to be seen if Bollard will sell a large tranche of kiwi $s and effectivly flood the market with them driving the price down. He did it in 2007 and got the desired effect. I will wait till next week to see what happens. Of course we all know that the dollar next week will be going down the elevator shaft to 1.70 when I decide enough is enough. Who said life is fair??
Yep, I agree with all that. Though I still think trends are a handy indicator for currency movements. Not so much for the short-term, as it only takes one good/bad set of figures to move a currency up or down, but looking at medium to long term, it seems to give a reasonable indication as to the overall direction a currency is heading, that effectively merges all the financial data year-on-year, giving a more representative indication as to where a currency is 'likely' to head overall. The daily/weekly ups and downs aren't perhaps so representitive of what is happening to the market overall, but reflects what data has been released that day/week.
This graph is for the last 10 years NZ$/GBP, and if I were a betting man, I think I know which way I'd be betting it goes for the next 6/12 months.
I could be wrong though (as my £20k loss is a testament to!)
Attached Thumbnails Will the reserve bank intervene?-nzd-vs-gbp-10-years.bmp  
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Old May 31st 2011, 10:24 am
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Default Re: Will the reserve bank intervene?

Originally Posted by Rolfie View Post
Yep, I agree with all that. Though I still think trends are a handy indicator for currency movements. Not so much for the short-term, as it only takes one good/bad set of figures to move a currency up or down, but looking at medium to long term, it seems to give a reasonable indication as to the overall direction a currency is heading, that effectively merges all the financial data year-on-year, giving a more representative indication as to where a currency is 'likely' to head overall. The daily/weekly ups and downs aren't perhaps so representitive of what is happening to the market overall, but reflects what data has been released that day/week.
This graph is for the last 10 years NZ$/GBP, and if I were a betting man, I think I know which way I'd be betting it goes for the next 6/12 months.
I could be wrong though (as my £20k loss is a testament to!)
Indeed. I was told by the money men who were seriously in the know that in March 2005 the pound was headed for well sub $2.50 AND that it was likely to stay there as it did a few years priviously. It was at that juncture around the 2.50ish mark. I held my nerve and got $2.64 just a few weeks later. Guess what within 6 months it had gone to over $3!!

So they were totally wrong. That is why I dont see trends. It either goes up or goes down. No one and I mean no one knows what will really happen eh? Who would have thought that the GBP would be worth what it was in 2008 (it got to 3ish again)..why? Who would have thought that avo a huge earthquake our dollar would rally. Why did the pound spike to $2.25 a few weeks ago??

I just hope Bollard does something to restrain the bloody kiwi!!
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Old May 31st 2011, 6:51 pm
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Default Re: Will the reserve bank intervene?

Originally Posted by Genesis View Post
Bill English has finally admitted that the strength of the kiwi has gotten too high. It has currently never traded so high since being floated in the 80s..

It is as yet unable (famous last words) to break the $2 resistance mark agin GBP it has been close to for a while. The reserve bank will apparently decide next week if it will interevene. It has done so once before and it achieved its goal.

I personally have decided to move our money to NZ after great thought and consideration as I don't believe it will ever return to anything we consider as 'good value'.

I said last week you would either have a real need or would have to be desparate to change just now but I accept that the money will earn another 60% in interest over here than what it does in the UK.

Whilst we do not need the money now I have concerns about the UK banking system and also with the UK govt. retail bank guarantee scheme.

I will leave holiday money there but will do a large exchange in the coming weeks what ever the rate. I will wait to see what happens next week to see if the kiwi sheds some strength.

I know its overvalued madly but I am concerned for the outlook in the UK, they say that they might look at putting rates up in Nov 2011 but who knows??

In the meant time the money in the UK earns **** all interest.

As I said life is fluid. How exciting!

I am fairly sick of wondering what to do. So as Nike says 'just do it'.

Watch the pound rise a few hours avo my transaction.
Not sure if the kiwi is over valued as such, I think it is more that the £ and US$ are tanking. This is probably more difficult to control than if it was a home grown problem, no?
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Old May 31st 2011, 7:39 pm
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Default Re: Will the reserve bank intervene?

Originally Posted by RJT UK View Post
Not sure if the kiwi is over valued as such, I think it is more that the £ and US$ are tanking. This is probably more difficult to control than if it was a home grown problem, no?
Funny you should that but Bernard Hickey (a money man on the radio) said that agin the trade weighted index the kiwi IS overvalued rather than just the pound and the US $ being weak. There now seems more likely than not that the reserve bank should intervene..but will it??

This is not going to be good for NZ unless something happens to restrain its value.
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Old May 31st 2011, 7:47 pm
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Default Re: Will the reserve bank intervene?

Originally Posted by Genesis View Post
Funny you should that but Bernard Hickey (a money man on the radio) said that agin the trade weighted index the kiwi IS overvalued rather than just the pound and the US $ being weak. There now seems more likely than not that the reserve bank should intervene..but will it??

This is not going to be good for NZ unless something happens to restrain its value.
I miss simonsi comments.... Heheh.
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Old May 31st 2011, 9:23 pm
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Default Re: Will the reserve bank intervene?

I had to change some over yesterday as I simply needed dollars here. I don't even look at the exchange rate TBH, it's too depressing. If I need it, I change it ... sad but true.

I doubt we'll ever see the rates we were getting in 2006/2007 again.
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Old May 31st 2011, 9:50 pm
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Default Re: Will the reserve bank intervene?

Originally Posted by Am Loolah View Post
I had to change some over yesterday as I simply needed dollars here. I don't even look at the exchange rate TBH, it's too depressing. If I need it, I change it ... sad but true.

I doubt we'll ever see the rates we were getting in 2006/2007 again.
You have to do what you have to do eh? Indeed the 2.70s will never, ever return. I think 2.50 is a dream. Ah well I well and truly missed the boat. 2 for 1 right now is actually looking quite sexy!!
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Old May 31st 2011, 10:32 pm
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Default Re: Will the reserve bank intervene?

Who can tell the future, but you know the higher things go the harder they fall and the Kiwi dollar is much too high. Does it have sustainable growth for the future? Does it have untapped mineral wealth like Oz?
It's some time since it was three to one, but it's not impossible that could happen again. Personally, I don't think this over-heated dollar is sustainable.
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