Forex Blog: Currency Trading News & Analysis.

September 19th 2006

How high will the Kiwi go?

Over the Last three months, the New Zealand Dollar (affectionately known as the Kiwi) has been on a tear, having appreciated 10% against the USD. At first, traders just assumed the upward price movement was a correction of sorts- to offset the Kiwi’s slide over the previous months. Now, however, forex experts believe they are witnessing a bona fide uptrend, and it is anyone’s guess when the Kiwi will return to earth. Analysts are attributing the currency’s strength to a renewed focus on yield, which had previously been placed on the back-burner in place of fundamentals-based trading. Since New Zealand currently offers the highest interest rates in the developed world, traders hungry for yield began flocking to the Kiwi when the carry trade became trendy again. The New Zealand Herald reports:

[One analyst] said the yield story had been underestimated by local markets, which had focused on pessimism from economists and the “tsunami of uridashi redemptions” which would bring the kiwi down as overseas investors withdrew their money.

Read More: Experts pick kiwi to keep on flying

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© 2004 - 2024 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.