The NZ dollar has topped out at 0.8109, nearly 17% from the lows seen at 0.6715 in March 2007. Now looks to retrace and could pull back into the 0.7400 area before stabilising.
The reason?
Not our economy, Not the RBNZ actions, Not any Government moves.
Purely offshore pressures.
See story below: Volatility sweeps global markets.
That's the reason: the rise of global risk aversion; something the RBNZ has been praying would happen.
Investors are pulling money home, worried about potential losses. It could run some way yet, as the US property market disasters come home to roost.
That means, currencies that were weak, like the Yen and Swiss franc, will be stronger, as funds are repatriated.
Currencies that were strong, like the NZD, AUD and GBP, will be weaker, as funds are withdrawn.
That means, currencies that were weak, like the Yen and Swiss franc, will be stronger, as funds are repatriated.
Currencies that were strong, like the NZD, AUD and GBP, will be weaker, as funds are withdrawn.
That means the NZD will weaken.
Might not go too far yet, but that is the trend, with the first target 0.7500.
What would stop this going too far are calm markets.
8.25% return is hard to beat, and that means the NZD cannot stay down for long. Equally the Japanese will not want a strong Yen, and may talk of intervention again.
But for now, and the next few weeks, the NZD is finally on the back foot.
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