Forex Blog: Currency Trading News & Analysis.

December 9th 2005

Currency traders punish New Zealand Dollar

Spurred by favorable interest rates, currency traders have bid up the value of the New Zealand Dollar to a 20-year high in trade weighed terms. This week, however, the NZD was a dealt a major blow, as Standard and Poor’s announced that New Zealand can no longer sustain its massive current account deficit, which is approaching 8% of GDP. In addition, the Central Bank of New Zealand announced the end of its policy of monetary tightening. If the US, Europe, and Canada continue to raise interest rates, the New Zealand interest rate differential will become less attractive. As the old saying goes, ‘what comes up must come down.’ The Financial Times reports:

The Australian dollar fell 0.7 per cent to A$2.3169 against sterling as soft GDP data strengthened a perception that Aussie rates have also peaked.

Read More: Headstrong kiwi flies too close to the sun

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Posted by Adam Kritzer | in Exotic Currencies, Investing & Trading | No Comments »

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© 2004 - 2023 Forex Currency charts © their sources. While we aim to analyze and try to forceast the forex markets, none of what we publish should be taken as personalized investment advice. Forex exchange rates depend on many factors like monetary policy, currency inflation, and geo-political risks that may not be forseen. Forex trading & investing involves a significant risk of loss.