Today New Zealand releases their unemployment figures for Q2. There is an expectation that the unemployment rate will drop by 0.4% indicating that the domestic economy could be in a positive position. The Reserve Bank of New Zealand has for the second time this year cut interest rate taking the Official Cash rate down to 2%.
This is down to the need to increase the inflation level which is particularly low. The NZD recent strength has done little to help the inflation level domestically and the high interest rate has encouraged savings from investors. Considering most of the majorly developed nations have very little or no interest in their banking systems the 2% in New Zealand is considered very attractive. This has essentially caused major investment in the currency creating unprecedented strength and probably a major over-valuation.
Moving forwards Sterling is looking set to be weak for the short to medium term at least with a potential for a further interest rate cut on the horizon pre 2017. If there was to be a further cut it would cause the GBP/NZD in my opinion to drop even further potentially taking the rate to the low 1.70’s.
If you’re looking to buy New Zealand Dollars in the short-term with Sterling especially, I would consider moving sooner rather than later before the rate drops further.
Working for a currency brokerage allows me to significant control over the level of exchange rates I can offer. I am also able to assist with the timing of a transaction to make sure you get the most for your money. If you do have a currency requirements please feel free to send me Ben Fletcher an email at [email protected].