NZ dollar’s strength provides a safe-haven for foreign investors
(13 December 2012 – New Zealand) New Zealand businesses see interest rate differentials and safe-haven investment flows as key drivers of the NZ dollar’s current strength according to the latest ASB Institutional Kiwi Dollar Barometer.
ASB chief economist Nick Tuffley said; "It is no surprise that interest rates are seen as a significant reason for the NZ dollar’s strength given current global rates.
Businesses also evidently perceive NZ as a safe place for foreign investors to park their money, which may relate to the comparative calm of NZ’s economic and fiscal positions.
"However, in times of extreme global crisis, we often see flight to the US dollar and the Japanese yen as money returns home."
Fewer respondents saw commodity prices as the key driver and even fewer saw quantitative easing as important.
"Despite recent media stories debating links between the US Federal Reserve’s quantitative easing and the strength of the NZ dollar, only a minority of respondents cited this policy as the key driver of the dollar’s strength," Tuffley said.
The majority of respondents put weight in China and the United States when asked what region would have the most influence on the NZ dollar.
Just over 40 percent of exporters saw China as the region having most influence while importers anticipated it will be the US with just over 41 percent choosing that region.
Businesses also evidently perceive NZ as a safe place for foreign investors to park their money, which may relate to the comparative calm of NZ’s economic and fiscal positions.
"However, in times of extreme global crisis, we often see flight to the US dollar and the Japanese yen as money returns home."
Fewer respondents saw commodity prices as the key driver and even fewer saw quantitative easing as important.
"Despite recent media stories debating links between the US Federal Reserve’s quantitative easing and the strength of the NZ dollar, only a minority of respondents cited this policy as the key driver of the dollar’s strength," Tuffley said.
The majority of respondents put weight in China and the United States when asked what region would have the most influence on the NZ dollar.
Just over 40 percent of exporters saw China as the region having most influence while importers anticipated it will be the US with just over 41 percent choosing that region.
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