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My view is we have had a very healthy clear-out in an extremely overweight trade, i.e. long NZD / short Aussie. The jawboning worked to great effect. Now that it has cleared out & seems to be settling down I would suggest NZD strength returns, albeit perhaps relatively short term. I have no doubt that the NZ economy will weaken over the next six months or so. Obviously there has been a flood of foreign money into the property market, although I expect this to continue, it may slow some with things like National's largely ineffectual CGT. Foreign property ownership is becoming a political hot potato & I think we are likely to see further actions around the fringes at least from Government.
And then there will be the impact of lower export prices, which effectively means less NZDs are bought to convert from USD.
Let alone the impact that lower prices will have on spending from the rural sector.
If the NZD looks like approaching parity again, we are likely to see the same jaw boning from the RBNZ.
Will the economy slow enough to lower rates? Perhaps, but its certainly not a foregone conclusion.
Originally Posted by snapiti
best presented article I have read in a long time.
http://www.interest.co.nz/opinion/75...stify-ocr-cuts
Basically says the economy is doing well and there is no reason to cut rates at the next RBNZ meeting.
I expect the $ to strengthen against the AUD once all the jaw boning has settle down and the simple facts make up the equation
Hopefully you find my posts helpful, but in no way should they be construed as advice. Make your own decision.
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