There’s an unusual amount of New Zealand Dollar Forecast around that we’ve come across recently. The currency is down as much as 10% since the beginning of the year, but it appears that this could be temporary. What’s more, a number of commentators believe that a snap election in New Zealand will provide a good reason for New Zealand to boost its currency, as well as strengthen its economy.
Why is this happening now? The answer lies in what appears to be the United States Federal Reserve’s decision not to raise interest rates in its August Federal Open Market Committee meeting. The Fed’s official statement said that it was keeping rates at zero to ensure “a gradual and orderly recovery in labor market conditions,” but this seems to be only a pause, as far as this country is concerned.
The “moderate” stance of the US central bank has been welcomed by the New Zealand government and others who would have otherwise seen the risk of inflation as a very real threat. The New Zealand Dollar Forecast is likely to continue to weaken until these concerns are addressed, which means that the New Zealand Dollar Forecast is likely to continue to decline.
One potential issue facing the New Zealand government is that when the Bank of New Zealand takes its decision to pump liquidity into the New Zealand economy, it makes the national currency appreciate. When the number of people who are unemployed or underemployed increases, the effect on the New Zealand dollar is going to be particularly bad.
The impact on the New Zealand economy from the decisions of the Australian central bank, UK Central Bank, US Federal Reserve, and others are all likely to have a direct impact on the New Zealand dollar. These things seem to be coming together in a way that hasn’t been seen before.
Over the weekend, there were indications that the economy may be suffering from the cutbacks in offshore trade by the Bank of New Zealand. As part of this, the Bank of New Zealand stopped purchasing New Zealand Government Bonds, which can affect the currency when people are buying the New Zealand dollar to buy them back at lower prices.
The amount of the Australian dollar that is likely to rise against the New Zealand dollar is going to make life much harder for New Zealand. This currency has recently risen against the US dollar, with the Chinese Yuan, and the New Zealand dollar.
If the New Zealand dollar weakens further, there’s a danger that the country may face a very sharp fall. One of the ways that this can happen is if there’s a large supply of Australian dollars in circulation, or if the Bank of New Zealand is forced to cut back on its stimulus measures.
New Zealand has had a great year so far, having seen a return to growth after the global recession. Its economy is continuing to grow and so it appears that the local economy has kept up with the rest of the world.
At some point, though, the Bank of New Zealand may be forced to cut back on its intervention, if that seems likely to cause inflation to rise. For now, however, the New Zealand dollar is unlikely to weaken significantly, although it is likely to weaken when there is a large influx of foreign currency.
There is another factor in the New Zealand Dollar Forecast that appears to be influencing the movement of the New Zealand dollar. The Bank of New Zealand is currently being advised to keep some of its inflation policies in place, even as they’re doing other things, as it could end up causing the currency to strengthen again.