Change could cause weakness for the New Zealand dollar (Dayle Littlejohn)

Now that Labour and New Zealand have formed a government led by Prime Minister Jacinda Ardern, policies are surfacing and many economists are predicting that the New Zealand dollar could remain under severe pressure for the foreseeable future.

The new Government are set to make two big changes. Firstly the way that the Reserve Bank of New Zealand decides interest rates are set to change, Previously just the governor of the RBNZ decides whether interest rates should be hiked or cut. The new rules will state that a monetary policy committee will decide the interest rates and not one person alone. This is similar to how the Bank of England decide future monetary policy.

As our regular readers will be aware that interest rates have a major impact on exchange rates. Rising interest rates tends to lead to strength for the currency where as a when interest rates are being cut the currency tends to devalue. The new government have stated that they want the new committee to strive for full employment above inflation levels.

The second big change is the cut to immigration, which could cause a fall in commodity output and consequently growth in general. The theory behind it is that there wont be the workers available for the jobs that are being created. Personally with the changes that are set to be rolled I agree with economists and believe the likelihood is that the New Zealand dollar will continue to devalue in the upcoming months.

If you are buying or selling New Zealand dollars this week, month or year and I haven’t covered your currency pair I would recommend emailing me with the currency pair (NZDUSD, NZDGBP, NZDAUD) and the reason for the transfer (company goods, property purchase) and I will response with my forecast and the options available to you [email protected]. Alternatively if you would like to discuss your requirements over the phone call 01494-787478 and ask to be put through to Dayle Littlejohn.

** If you are already using a brokerage and would like to know if you are receiving the best rates possible email me with the exact figures and I will reply with our live price. This will take you a few minutes and in the past I have saved clients thousands! **