Heading into Tuesday, the New Zealand dollar finally looks to be heading in the right direction after an appalling display during 2020 thanks to the coronavirus outbreak. The Kiwi has remained under pressure throughout the whole of the year as market risk plummeted, bringing the risk-sensitive NZD with it. However, the New Zealand government pledged a business continuity package this week, which has been welcomed by business groups and economist. Reassurance was given as this only marks the first battle in the war on the coronavirus outbreak. The New Zealand dollar rose more than half a US cent following the rescue package’s announcement, with the NZD/GBP exchange rate coming in at 0.49174 this morning, up from the same time yesterday.
Struggling NZD Looks for a Way out of Coronavirus Grips
The New Zealand dollar has been one of the worst hit currencies in global trading throughout 2020. The impact of the coronavirus has been significant for the Kiwi as investors market risk sentiment has hit rock-bottom with little relief coming its way as the virus spreads throughout the globe. Despite New Zealand still holding low levels of infections of the COVID-19 virus, the significant trade and risk links have kept the currency under pressure. The headlines in global newspapers continue to focus on the spread of the disease, and as long as no signs of a treatment arise, the pressure will firmly weigh on risk-related currencies like NZD.
Some Signs of Relief for New Zealand After Support Package Announced
At 2pm (NZ time) today, the New Zealand government announced a business continuity package which has been welcomed with open arms by business groups and economists. Reassurance was given by the government as they noted that this is one of the first attempts of combatting the coronavirus – further noting the road ahead is set to be a long one.
Nevertheless, following the support package announcement, the NZ dollar rose, with the share market also recovered some ground from its earlier losses this morning. The market hopes that the $12.1 billion package will substantially help businesses keep operating through the period of the coronavirus outbreak. For New Zealand and its businesses, many are hoping that the support package can provide some much-needed breathing space and support for all businesses.
Looking ahead, the developments in the coronavirus crisis will be the driving force for NZD, any signs of slowing spread will help the NZ dollar, but negativity will only pile on more pressure.
If you would like to learn more for an upcoming currency transfer, you can get in touch with me directly, Royston Howell, using the form below.