Quote Originally Posted by Joshuatree View Post
I confess I dont know much about playing the currencies but we have exposure to $US ,$A and kiwi. Keep hearing $US is a good place to park $but the Fed is going to drop rates (and we are too ?) so maybe having a spread of currencies is a little protection in the volatility ahead but overall close to neutral.
Unfortunately it doesn't quite work that way. In times of uncertainty the reason why currencies flee to USD is due to stability (as the US is the largest economy in the world, it makes sense to keep the assets in USD). When you price assets like crude oil, gold, silver, etc. they're all denominated in USD. So to the person that wants to avoid currency risk exposure to say buying gold, they need the USD. Both Canada and NZ hold NO gold reserves, that is the central bank holds no physical gold whatsoever and is not in the market to buying and selling like we see other countries do (ie Russia and China buying gold)... and because NZ holds no gold reserve, the NZD currency is 100% reliant on it's fiat value.

This COVID19 is a killer for the NZ economy. If China stops buying our natural resources, our diary and meats, and more recently with immediate effects, no Chinese tourists and students coming to NZ; then i'm afraid the NZ '1 trick card country' is going to be exposed to a lot of downturn in the economy. The simple thing is just follow what Jacinda Ardern is doing. How can you continue to increase funding to beneficiaries, teachers, doctors and nurses, IRD workers, etc.. when the IRD tax take is diminishing? The simple answer is 'We will BORROW the FUNDS!' because when the NZ Reserve Bank lowers interest, you're going to see a double end sword. On the gov't borrowing front, foreign lenders would expect a higher interest payment due to NZ's increase risk (state of the economy), and on the domestic front, NZ capital will move abroad (mostly to the US) to seek safer return on investment.

On my ticker i'm seeing NZD/USD at 0.6226