Another Volatile Month For The Kiwi Dollar

There was some relatively strong data out from New Zealand this month, with Producer Prices eclipsing market expectations and Retail Sales showing a robust 1% gain. Unemployment also fell to 3.5% which leads us to believe the RBNZ are likely to keep their interest rates at a lofty 8.25% for the foreseeable future. However, the market is focussing on the equity market performance and new revelations on the scale of the credit crisis and it is this that is overshadowing the other technical data.

This had led to another volatile month for the NZD. The dollar finished the month more-or-less where it started, at around the 2.67 mark, but the difference between the high and the low was 13 cents (2.65 – 2.78), which on £100,000 is $13,000!

The moves continue to be erratic, exaggerated and impossible to predict in the wake of the sub-prime issues, so those with funds available to them may choose to take advantage of these gains and buy some or all of their currency by way of a spot deal (buy now pay now) or forward contract (buy now, pay later). Both are risk free strategies as you know from the outset exactly how many dollars you will receive.

Another option available at HiFX is a market order. This is simply where the client agrees a rate they would like to achieve and gives instructions to buy if and when this level is hit. It is a good way of hitting the peaks in the market, although bear in mind it isn’t a risk free strategy and there is no guarantee that your ideal rate will be realised – the market can easily move back down as quickly as it has come up.

At the beginning of the month a lot of people were looking at a rate of 2.70 or 2.75. We broke through these levels and found that they were then reluctant to trade as they were waiting for 2.80….which never came. If you set yourself targets, be careful not to keep moving these as it becomes an extremely risky strategy in light of the volatile climate we are currently in.

As explained, there are ways to protect yourself against market fluctuations if you are risk averse, or at least ways to manage you risk effectively. Even if you do not decide to move any money in the short term, or are a long way off your planned migration, the more information you get now, the easier you will find it.

The important thing is forward planning, like with all aspects of your migration – speak to the experts and set yourself a strategy that is both realistic and one you are happy with. There is no bad time to be thinking about the foreign exchange aspect of your move and the options available to you as the rate you get will have the biggest impact on your new life in New Zealand.

If you would like to find out more about our service and your options then call the migration team at HiFX on +44 (0) 1753 859159 for a free, no obligation consultation. Alternatively email migration@hifx.co.uk.
 

Like this? Then share with your friends and colleagues!