New Zealand Dollar jumps to six month high

NEW ZEALAND DOLLAR REVIEW | US Federal Reserve’s fresh round of quantitative easing heralds stronger Kiwi.




THE New Zealand dollar traded at 1.9468 to the British Pound on Friday up from 1.97 on Monday, finishing on an average of 1.9645 for the week.

Such drastic strengthening of the New Zealand Dollar can be largely attributed to the US Federal Reserve’s program to revive the growth stimulus in the world’s biggest economy. Speculation in this regard caused risk appetite to increase, inducing investors to move away from safe-haven assets and into high-interest, riskier economies, such as New Zealand. This movement in risk appetite is one of the primary causes for the strengthening Kiwi.

After Germany’s Constitutional Court approved the Eurozone’s new rescue plan, positive sentiment dominated the market, thereby increasing demand for riskier assets. The New Zealand Dollar was amongst the three most demanded currencies after this announcement, along with the Canadian Dollar and the British Pound which saw the most currency being bought in the market on Thursday.

Domestically, the ascending Kiwi has been supported by the New Zealand Reserve Bank’s decision to keep the official cash rate at 2.5%. The cash rate has remained at 2.5% since March last year and has helped identify New Zealand, and by nature the Kiwi, as an appropriately stable investment.

Looking ahead, investors will be focusing on data due out this week on New Zealand’s second-quarter gross domestic product and its balance of payments. “Relatively poor New Zealand data this week (would) likely to take the shine off the Kiwi,” ANZ National chief economist Cameron Bagri told Reuters.

GBP / NZD: 1.956
EUR / NZD : 1.583
USD / NZD : 1.207
AUD / NZD : 1.270

Exchange rates as of 17/09/2012 at 08.56am.

Composed by Saskia Johnston of 1st Contact

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