Genesis

The reserve bank can influence the kiwi's value by selling their kiwi $s they have in their account and buying another currency. This floods the market place (to a degree) with kiwis and lowers the value.

simonsi

Trouble is once anybody defends a particular currency figure, or tries to prevent a free-market movement the market can and will use that, effectively draining the resources of the defender. That brought the UK govt out of the ERM on Black Wednesday when it became clear that ludicrously high interest rates wouldn't be enough. Once out of the ERM (ie the defending of a particular exch rate ended), the false market conditions were removed and the speculators couldn't use it to leverage so just like a weather storm, when the conditions that created it are removed, the storm peters out...

The UK govt thought they were big enough to move the market. They lost that bet.

bourbon-biscuit

I'm holding out as long as we can! We *MUST* get it over here by about a fortnight's time though .... everything crossed .... there's a leaky roof and a dishwasher at stake!

Genesis

Hang on and cross yer fingers!! I am sure there will be some relief for those of us holding sterling soon..good luck!!

simonmarkellis

So in laymans terms... if the NZX takes a big hit due to todays earthquakes, how come the currency hasn't?

rick78

Up from 1.96 to 2.004 now...

Genesis

The kiwi is loosing ground today but over other things rather than the earthquake today. It has just edged over 2 for 1, but I had read today that is possibly more about the sinking Dow. I read about this stuff on the www.interest.co.nz site.

Apparently Alan Bollard just talking about the NZ OCR rate going up around xmas time 2011 pushed it even higher towards the end of last week.

What is for certain is that these are uncertain times. We are just as likely to see 2.15 next week as we are 1.85. And as people say those bubbles can burst at any time.

Genesis

Well hot off the press. The NZ treasury predicts that the kiwi will stay on high until mid 2012 when it will fall to 'around historic values'.

I think that shows that trends regarding currency are simply not trends. It is up and down like I have said before. If it was a trend there would be no end to it and the above forecast would not have been made.

Not good news for those who need kiwi 4's in the near future but better news for those who need it in 12 months time.

Exports are set to soar when the kiwi finally gets back to reality in the value department.