¥€$, $€££ £€$$
Trading in the Kiwi dollar at the moment is a bit under the weather. More bad news with our gigantic Current Account deficit (which I and everyone else have warned of but only Winston Peters really seems to care about) today. NZ inflation will blow out to 4% next year! Hello! If the Fed hikes interest rates to counter US inflation soon (as has been talked about) AND Labour does a deal with the Maori Party and the Greens will this trigger "a rapid and substantial market-led exchange rate depreciation," that Treasury in it's pre-election fiscal update has warned us about?
It is all explained in this post of 6 Sept.: "Just passed the US$0.71c barrier in trading - buy US$ now with your Kiwi - it won't be much more affordable than this."
UPDATE@6:30pm 19 Sept.
NZD fell through 70c late this afternoon.
UPDATE@10:30pm 19 Sept.
Canary in the Mine reports:
Statistics New Zealand will release the latest current account figures, also known as the balance of payments, on Wednesday...Ten economists polled by Dow Jones forecast the median quarterly deficit for June would swell to $2.6 billion, or 7.5 per cent of GDP for the June quarter. The last time the current account deficit was higher as a proportion of GDP was in March 1986, when it was at 8.9 per cent. Any level above 5 per cent of GDP is usually an alarm signal to international investors. Reserve Bank Governor Alan Bollard says this is not sustainable.
UPDATE@5:30pm 20 Sept.
The euro also dropped ahead of expectations the US Federal Reserve's will raise its benchmark interest rate tomorrow, widening a gap with the European Central Bank.
Tomorrow, Wednesday 21 September we have a possible interest rate hike of the Fed and a possible current account blow-out being reported by Stats NZ. Add to that political instability and the alignment is beginning. I hope you have put your NZD into USD by now. We're presently at 70.2c