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Hi All,

Here is an update of what’s been happening in the Currency Markets throughout August with the Kiwi Dollar.

The local Dollar showed little reaction against Sterling at the start of the month after New Zealand’s jobless rate rose to a nine-year high of 6.0% in the second quarter as a surprise BoE policy decision offset the bad news. The unemployment rate rose to its highest level since the September 2000 quarter. It also marked a one percentage point jump in the rate from the previous quarter, the biggest jump since 1988. Still, employment fell by a smaller than expected 0.4% or 10,000 jobs in the June quarter, led by declines in full-time employment. Part-time jobs rose.

Domestically, New Zealand retail sales rose for a fifth time in nearly two years in the second quarter while the housing market showed more signs of stabilising, backing views of a gradual recovery and that rates will remain on hold in the coming months. The 0.4% gain in retail sales marked the end of the longest slump in sales volumes on record and suggested the economy will emerge from its worst recession in 30 years in the second half of 2009.

In New Zealand we also saw positive news for the Dollar with house sales up by 34% and very positive Retail sales figures. This took GBPNZD down to a low of 2.4065 which hasn’t been seen since 1997.

In the UK, recent Unemployment figures showed a 13 year high which had a negative effect on the Pound as they suggest that the deterioration in the labour market is yet to show signs of stabilisation

The Reserve Bank of New Zealand’s quarterly survey of business leader expectations, which showed little change in the outlook for inflation, economic growth or monetary conditions also passed largely unnoticed. However, the local Dollar did manage to capitalise on a broadly weaker Sterling on Thursday after New Zealand’s annual trade deficit narrowed to its smallest in six years in July. The deficit of NZD2.48bln against forecasts of NZD2.55bln came from a sharp slump in imports, reflecting the impact of a 15-month recession.

New Zealand continues with second tier data releases this week ahead of the RBNZ policy meeting on the 10th September.

Current Central Bank Rates:

New Zealand (Reserve Bank): 2.50% (Next meeting 10th September)
UK (Bank of England): 0.50% (Next meeting 10th September)

GBP/NZD Highs & Lows of August:

High: 2.5488
Low: 2.3617

A movement of: 7.92%

Difference this would make on £200k

High: 509,760 NZD
Low: 472,340 NZD

A difference of: 37,420 NZD

Whilst FX isn't the most thrilling of subjects, the sooner you begin to think about your money transfers, the more likely you are to make your money go further.

Regards




Jon Sermon
HiFX
 
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