Will the New Zealand dollar fall any further, or is the damage already done?

It’s been a bad year for New Zealand dollar bulls through 2018. A number of issues have contributed towards a much weaker New Zealand dollar. Financial headlines will highlight how the Kiwi has lost over 10 cents against the US dollar this year, with many of our readers getting in touch and asking us whether the Kiwi is likely to continue to fall.

The New Zealand dollar is trading at its lowest level against the US dollar since early 2016. Against the pound its around the lowest levels since June of 2016. One of the most obvious reasons for the weakening New Zealand dollar is the increasing interest rates in the US. These have made the greenback a more attractive currency to hold funds in. This has negatively impacted the likes of NZD and AUD as they previously offered the highest rates of interest within the developed world so they’ve lost some competitiveness, and subsequently they’ve lost value.

The economy is also showing signs of slowing down, and the weakening dairy prices have added to the woes for NZD exchange rates. To add to these issues for the currency it hasn’t helped that the Central Bank (RBNZ) has remained dovish in its comments and approach to monetary policy in contrast to the US Federal Reserve Bank, which is another reason for the negative outlook for NZD.

In regards to the GBP/NZD exchange rate, I expect it to continue to trade north of 2.00 unless the Brexit talks between the UK and the EU take a turn for the worse. A deal is expected to be in place by next month with this week being particularly crucial, owing to the EU Summit at the end of the week.

Aside from the Brexit related news I think tomorrow’s UK Inflation data released at 09.30am could also offer the GBP/NZD pair direction.

If you wish to be updated in the event of a major move, which would most likely be Brexit driven, do feel free to register your interest with me. Use the form below to get in touch, I will be happy to respond personally.

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