Tempting NZD


New Zealand DollarToday let’s talk about the prospects of a single currency, unfairly ignored by many traders. This is the New Zealand dollar. Beginners usually do not pay attention to this tool, it is psychologically quite understandable: New Zealand – a small country, which rarely appears on television news, and the New Zealand dollar (“Kiwi” on traders’ jargon) is not included in the five major currencies of forex.

But, you see, an investment in the little-known currency may be no less (and even more) profitable than investing in conventional U.S. dollar, euro, pound, yen and franc. Especially in the case of the NZD all conditions for this exist: the ability to trade on a variety of couples with kiwi provides almost every broker, and news and analysis on the currency are present in all information and news feeds for traders.

Why the New Zealander is so attractive in 2013? This high-yielding currency, which responds positively to the craving for risk. The global economic recovery and the reduction of risks in the world this year should support it. Dynamics kiwi has a definite correlation with the dynamics of the neighboring country currencies – the Australian dollar, but at the same time seems to be more stable. The main direction of Australia’s exports – raw materials, so the Aussie sometimes very rapidly reacts to negative news from China. The basis of New Zealand’s exports – agricultural products, particularly milk, and so Kiwe is not afraid of difficulties of China so much. Overall, New Zealand is a strong and stable economy without debt problems and with a strong banking system.

Assessing the prospects of the world economy in 2013, we select the most probable key trends and evaluate their potential impact on the rate of NZD.

  • The acceleration of growth in the Chinese economy. Published statistics of the PRC for the year 2012 has pleased investors. The trend seems to be retained in January: a preliminary January purchasing managers’ index of industrial areas of China, issued by the bank HSBC, reflected growth from 51.5 to 51.9 two-year high. Growth of the second economy in the world should have a positive impact on the prospects for the Australian economy, which supports not only Australian, but also the New Zealand currency.
  • Reduction of the severity of the debt crisis in the eurozone.
  • Continuation of stimulating monetary policy by the world’s leading central banks.
  • Continuation of stimulating monetary policy by the world’s leading central banks.
  • Resolution of the question of “fiscal” cliff and the “ceiling” of government debt in the U.S., as well as more confident recovery of the U.S. economy.

All these trends have to support the growing optimism in global financial markets that will benefit higher-yielding assets, including the kiwi.

Let’s not forget about the internal factors of support for the New Zealand dollar. The New Zealand economy is gaining momentum after a slowdown in late 2012. Thus, the index of manufacturing activity in December, BNZ has grown from 48.8 to 50.1, going to the growth zone. The average value of the index in the past year was 50.9 points.

Risk for “kiwi” is the possibility of lowering rates of the Reserve Bank of New Zealand (RBNZ) to stimulate inflation and the depreciation of the national currency. In the fourth quarter of 2012, consumer price inflation in New Zealand was +0.9% y / y, down from the RBNZ target range of 1% -3%.

For more confidence in the security of investments I recommend investors to buy the New Zealand dollar against the British pound in 2013. It is highly unlikely that the “British” will look more attractive than kiwi this year, so the risk of loss from such investments is small.


About Author

I have been friend with currency market since 2006. I hope that this friendship is not only useful to me, because over the years I have repeatedly provided analytical services to various companies and media outlets. I love fundamental analysis. Every day, I am convinced that the statistics is not boring numbers but fascinating reading, which, moreover, can predict the future. Technical analysis is also not neglected, especially as my hobby - finding effective algorithms for automated trading systems.