New Zealand Dollar Exchange Rate: NZ Dollar Drops as Oil Prices Fall Further

New Zealand Dollar Exchange Rate: NZ Dollar Drops as Oil Prices Fall Further

The New Zealand dollar fell sharply following a crash across currency markets at the end of the trading week last week. The crash was fuelled by plunging oil prices and equity markets as a result of heightened fears of the economic consequences of the COVID-19 virus crisis. The GBPNZD exchange rate finished up trading on Friday in the 0.49 range, but now opens on Monday morning having dropped into the 0.48 range. The ongoing pressure of the coronavirus has damaged the NZ dollar since the outbreak began and little positivity has arrived since, leaving the risk-sensitive currency struggling at the bottom of the major trading currencies.

Oil prices and equity markets sink, pulling NZD with them

Markets have noted a crash in oil prices over the course of the day for the Asian trading session. May Brent crude closed on Friday at US$45.27 a barrel but was trading late today at US$32.33 after Saudi Arabia and Russia failed to agree on production levels and appear headed for a price war. Meanwhile equity markets also continue to struggle with US equities futures are also deep in the red with the Dow Jones expected to open later today down as much as 1,200 points from 25,864.78. New Zealand’s benchmark S&P/NZX 50 Index fell 2.9 percent today.

The sharp fall in the Kiwi and Aussie currencies have triggered “stops”, which are points that trigger automatic selling or buying. This is a situation which hasn’t played out for a long time and the market is still trying to get to grips with what’s happened.

Coronavirus pressures remain with quarantine in Italy

The number of known coronavirus cases has soared past 110,000 globally with deaths now approaching a total of 4,000. In Europe, Italy is trying to quarantine around 16 million people living within its northern regions, which is the centre of the nations rising number of infections, but the success has been mixed. A further 133 deaths on Sunday brought that country’s total to 366.

Meanwhile, in New Zealand, the number of confirmed cases remains at five, but 54 people working at a hospital in Auckland’s North shore have been asked to self-isolate after coming into contact with a person who has probably contracted the virus. The Reserve Bank of New Zealand and the New Zealand Banker’s Association put out a joint statement saying the banks are ready to respond to the COVID-19 outbreak, as the virus has been labelled. With the Reserve Bank of New Zealand governor Adrian Orr noting that the bank’s responses to his queries show that they are prepared and “well attuned to any impacts on their customers”.

If you’d like to discuss these factors and how they could impact an upcoming currency transfer, feel free to get in touch with me, Tom Holian, using the form below.