New Zealand Dollar Does Too Well?

But it would seem that there is equal drama available with some currencies when they are doing well.  This can be seen from the recent report on the Bloomberg website – which reported on the drops experienced by the New Zealand dollar.  It also mentioned the Australian dollar, which seemed to be in a similar position.

So what is going on here?  Is the New Zealand dollar really in trouble?  It seemed that there was a redressing of the balance in some sense.  The figures you would have seen on your currency converter recently would have told you that the New Zealand dollar seemed to be doing rather well.  But some believe it has been doing too well, and that has led to the balance being redressed.

So let’s take a look at how things have progressed over the last month or so, to see how the Kiwi dollar has been performing.  Back on the 11th August the Kiwi dollar was standing on 0.6705 US dollars.  That dropped back to 0.6654 the next day, but that was the extent of the time spent in the region of 0.67 dollars for that point in time.  When the next day had ended the New Zealand dollar had climbed back to 0.6799 – as close to 0.68 territory as it could possibly get.

And in fact it finished that week in style by claiming that territory and grabbing an exchange rate of 0.6877.  Where would things go to next?

The following week saw the US dollar fight back, and the success of the New Zealand dollar from the week before was redressed as it slid all the way back to 0.6651 by the end of the day.  Was this evidence of the drops that have been reported on the Bloomberg website, as well as elsewhere no doubt?

Let’s see what happened next.  We’ve seen before with this currency that it can tend to bounce up and down quite a lot against other currencies.  Whereas a big jump for another currency pairing might be a fraction of a cent, with the New Zealand dollar you can fully expect to see a difference of several cents over the course of a single week.  It doesn’t always happen, but when you look back over the weeks you will be surprised how often it does.

As it turned out it claimed 0.6685 on the 19th, 0.6764 the following day and then 0.6818 the day after that, to finish off the whole week.  It then managed to stay in the region of 0.68 for the rest of the month, which was quite an achievement in itself.

Something of a predictable dip occurred on the 2nd September, when the Kiwi dollar dropped back to 0.6746.  But that first week finished with a charge forward by the Kiwi to claim an exchange rate of 0.6839 when all was said and done. 

And at the end of that week we had an even better exchange rate to report on – one of 0.7063.  So does this fly in the face of the report on the Bloomberg website?  No – as these day’s end figures only go up to the 11th, and the report was published on the 14th.  Clearly there was more in store as the markets opened on Monday morning – but it is anyone’s guess what the final exchange rate will be when they close that same night.

So there we have it – at least for now.  The feisty Kiwi has a lot of grit in it and it is determined to try and hang onto the best exchange rate it possibly can.  The most interesting thing is whether it can persevere and keep on grabbing good exchange rates, or whether it will slide back each time, as the report seems to indicate it might.

Of course, big rises in the exchange rates of a particular currency are always nice to see.  But if these rises are rather too much to expect then we can see the balance being redressed very soon afterwards.  Such is life, you might say.  And it would appear that life is what’s happening to the New Zealand dollar right now.

So keep an eye on the New Zealand dollar in the coming weeks.  It may settle down a lot more than it already has – or who knows, it could start out on another upward swing again.