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  1. #1001
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    Default New Zealand Dollar Likely to Drop Below 50 U.S. Cents . . .

    New Zealand Dollar Likely to Drop Below 50 U.S. Cents, AMP Says

    By Tracy Withers

    Jan. 27 (Bloomberg) -- New Zealand’s dollar may fall below 50 U.S. cents for the first time since 2002 as a deepening global recession drags down commodity prices, said AMP Capital Investors Ltd., the nation’s biggest non-government fund manager.

    “There is still some downside risk in the context of the global slowdown,” Jason Wong, director of AMP Capital investment strategy, told reporters in Wellington. “Commodity prices are probably going to remain pretty weak.”

    Prices of New Zealand’s raw materials exports fell 24 percent last year, curbing the incomes of farmers and helping push the nation into its first recession in 10 years. New Zealand’s currency slumped 31 percent versus the U.S. dollar the past 12 months, the second-worst performance among the 16 most- traded currencies against the greenback.

    The currency was the fourth-best performer in 2002 through 2007. “History shows that when we go from periods of extreme overvaluation we go to extreme undervaluation,” Wong said.

    The currency is likely to fall below 50 U.S. cents, he said, without making a detailed forecast. It bought 52.73 cents at 3:15 p.m. in Wellington trading.

    Reserve Bank Governor Alan Bollard cut interest rates by 3.25 percentage points since July. He’ll probably cut the rate at least 1 point to 4 percent on Jan. 29, according to all 11 economists surveyed by Bloomberg News.

    Bollard probably will lower the rate to 3 percent later in the year and may trim it further, Wong said.

    Still, there’s a limit to how low the rate can go because New Zealand banks need to keep deposit rates high enough to attract money from local and overseas savers and investors.

    Local Funding

    “If they reduced rates to zero then where are banks going to get their money?” Wong said. “If I was a trading bank boss I’d be whispering to Alan that you’ve got to take that into account when you’re setting interest rates.”

    New Zealand needs to maintain a higher rate than other countries to attract overseas funds, he said.

    “We have to stand out to some extent so people lend to us to support our spending habits,” he said. “If you’ve got lower interest rates that just makes it more difficult.”

    http://www.bloomberg.com/apps/news?p...rld_currencies

  2. #1002
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    In the long term NZD may go below 50 cents.

    I think the market has factored into the price of a weak economy and RB cutting rates 1% with the drop from 60 to 52 cents.

    I had a chance to short the kiwi at 59 cents and I didnt.
    Having got ourselves into a debt-induced economic crisis, the only permanent way out is to reduce the debt – either directly by abolishing large slabs of it, or indirectly by inflating it away.

  3. #1003
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    Quote Originally Posted by Dr_Who View Post
    In the long term NZD may go below 50 cents.

    I think the market has factored into the price of a weak economy and RB cutting rates 1% with the drop from 60 to 52 cents.

    I had a chance to short the kiwi at 59 cents and I didnt.
    Me too. Nevermind. Anyway it is strange to see Kiwi was very strong overnight and is sitting mid 53 range. Given the fonterra pay out and OCR decision i was expecting much lower. NZ $ seems to have more in common with the DOW than the NZ economy. If it decouples then it will be fun.

    Am short Kiwi but long Dow and hope to see this decouple after 9am when Bollard makes his call. I am wondering if he will drop 1.5% as this would make sense. If the end is going to be 3% then get there sooner rather than later in my opinion. The Kiwi still needs to drop to .45 for the long term health of NZ. Imports are still too high and a short export prices will be pressured by the EU and other countires protectionist moves. The Kiwi will have to be lower to compensate for that.

  4. #1004
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    Rate cut all but priced in by traders already.

    Dr Who I feel worse. Not only did I not sell short but it was in the face of every technical indicator telling me to short :mad:
    Disclaimer: Do not take my posts seriously. They are only opinions.

    AMR has sold all shares and is pursuing property.

  5. #1005
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    not as priced in as we thought!! Anyway i expect the Kiwi to meander downwards when the Euro traders wake up in London so will put in a stop to protect my profits and hopefully watch it hit the 50 cent mark soon

  6. #1006
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    I'm bearish , support at 5250 has now become resistance , negated by going above 53

    see a head and a shoulders in here over the last few days.
    Last edited by peat; 11-02-2009 at 10:46 PM.
    For clarity, nothing I say is advice....

  7. #1007
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    Quote Originally Posted by peat View Post
    I'm bearish , support at 5250 has now become resistance , negated by going above 53

    see a head and a shoulders in here over the last few days.
    am watching. thanks peat

  8. #1008
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    do please take everything I post with the proverbial grain of salt and DYOR tags attached Mysterybox
    My own trade was stopped out on that spike above 53 tho I re-entered again once it broke the uptrend last night at 2100 on Feb 12th , and although this new trade has offered a max of 80 pips I havent bagged any - its jumpin around like a demon. not quite so sure what its doing now.
    For clarity, nothing I say is advice....

  9. #1009
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    Quote Originally Posted by peat View Post
    do please take everything I post with the proverbial grain of salt and DYOR tags attached Mysterybox
    Yes, I enter when my own rules permit. Thanks

  10. #1010
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    Quote Originally Posted by peat View Post
    not quite so sure what its doing now.
    decided it had turned

    stopped -30 and reversed at .5241 currently +30 but yeh getting a bit jerked due to my fickleness

    all trades visible here
    For clarity, nothing I say is advice....

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