New Zealand’s foreign exchange market handled an average of US$9.5 billion per day in April 2010, down from US$13 billion in 2007, but up from US$7.5 billion in 2004 and US$4.2 billion in 2001, the Reserve Bank reported as part of the BIS survey, which is carried out every 3 years by 53 central banks.
The New Zealand part of the survey included data from the five major banks participating in the wholesale financial market.
“Since 2007, foreign exchange turnover in New Zealand has decreased by almost 31%," said the Reserve Bank's Head of Financial Markets Simon Tyler.
"Much of the decline is due to a fall in foreign exchange swap transaction volume, only a modest 3% is due to a fall in the New Zealand dollar versus the United States Dollar since April 2007. This contrasts sharply with international data which show a 20% increase in global foreign exchange turnover (including spot transactions, outright forwards and foreign exchange swaps) to US$4.0 trillion per day from U$3.3 trillion in April 2007," Tyler said.
“Overall, the falls in transaction volumes in New Zealand and the New Zealand dollar have been mainly driven by less overseas interest in the New Zealand dollar and a shift from short to longer-term funding by New Zealand’s banks.”
A question I cant get my head around: Increased inflation pressures and a subsequent increase in the OCR (Or expectations of) appreciates the NZD in terms of the US. But I read that inflation expectations in the US (I'm assuming the FED would hike rates when this happens) will lead the USD to devalue significantly.
How can this be? Is it due to the expectations of hyper inflation creating instability?
I would have assumed that increased inflation expectations in the US would have lead to USD appreciation, not depreciation.
Or am I simply confusing the dichotomy between nominal money demand/supply and real values here.
Also, why would the US want to devalue its currency, when this simply increases the value of its real debt?
it might be the fact when lenders to the US get spooked about security of repayment they will demand higher interest rates but if that goes too far it will render US debts increasingly risky and so rates will soar even higher and potentially reach some tipping point.
high inflation is not positive for a currency.
from my notes this year :
Countries with relatively higher inflation or where inflation
levels are perceived to be rising ⇒ depreciating currency.
remember inflation is related to interest rates but they are not the same thing... interest rates go up in an attempt to compensate for inflation. but if the difference between them is getting greater then you're losing ground faster (by having fixed interest deposits)
nzd hammered this arvo as S&P Revises New Zealand Foreign Currency Rating Outlook To Negative From Stable
S&P: Main Risk To NZ Rating Is Significant Weakening In Bank Credit Quality "The announcement was completely out of the blue, and the impact (on Tokyo's FX market) was large because market flows are very thin ahead of Tuesday's holiday in Japan," he says. S&P says decision due to risks from expected wider external imbalances, weakened fiscal flexibility as well as vulnerability to external shocks
"Finance Minister English says S&P move shows N.Z. should rely less on foreign cash; means country must cut foreign reliance."
But how will we pay for our overpriced houses? Earn more than we spend? huh yeah right.
I read a report from the RBNZ that NZ had spent $1.54 for every dollar we had earnt for about the last few years.
That seems insane to me
Anyway, on the NZD/USD front, when would you say there is a downtrend in place? havent yet seen lower lows or lower highs etc
Strange how various articles have attributed the fall of the NZD - which admittedly started minutes after - to the earthquake in Christchurch
But clearly this is false causality as the Euro and the Aussie the yen and the cAD have all weakened against the USD at exactly the same time.
NZD went down with the quake - of that there is no question in my mind.
Agree with you Peat re AUD, Yen, and CAD - clearly this is false causality
My impression is that overseas traders closely link NZ and Ozzie even if it is illogical and there is no direct co-relationship of the event beyond the name Australian plate ...
If it's bad news for NZ then it's also bad news for AUD...
As Japan is a significant partner of NZ and OZ then ...
Assume CAD as commodity linked currency may have caught the cold from Oz ...
Refer also General Chit Chat for my trading diary notes of my 14 minute NZDUSD trade during the CHCH earthquake...
I was also short EURJPY on 10 March the day before the Japan earthquake - picked up 14.6 pips in 30 minutes and closed the trade in profit...
Just as well I was not still in it the next day ...
Last edited by Toulouse - Luzern; 22-03-2011 at 11:25 AM.
Reason: correct grammatical error
WOW Not one Fx Posting here For now Since 18th Feb 2011 - so some six odd weeks.
Please any who want Give me a shout on Skype : zarif786 (UK) will gladly add you in my Skype room And also I have a noce Google room taht if you want you can join and we can have rapport and discussions and trade and ideas views sharig etc.
Originally Posted by peat
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