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Yea, no easy answers
Originally Posted by Daytr
Agreed re flight to safety, but NZ is a net importer so the balance of payments each month is against you.
It's far more likely that it will be a USD move than an NZD move that breaks the trend.
Agreed about the chart, and that it will primarily be a USD move. But US is a net importer so the balance of payments each month is against them too.
A weaker domestic currency stimulates exports and makes imports more expensive. This can suppress import demand, and can be disinflationary.
A strong domestic currency hinders exports and makes imports cheaper. This can boost import demand, can be inflationary, aggravate BoP, and deficits.
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