Welcome to our account of movement in the foreign exchange rate in the past 24 hours. This is intended as a brief guide to what’s affected the exchange rate overnight, to help you decide when’s the best time for you to change currencies.
Three cheers for the land of Peter Jackson’s The Lord of the Rings! The New Zealand dollar raced ahead of its rivals last night, on unexpectedly strong growth in Q1. In particular, the Kiwi dollar took three-quarters of a cent from its Australian cousin, and a full pence from the UK pound.
Why has the New Zealand dollar gained so much?
Because the New Zealand economy expanded more than double the forecast rate in Q1, at 1.1% compared to 0.5% forecasts. This suggests that, far from being stuck in fifth gear as the markets had feared, New Zealand is making strong progress recovering from the Christchurch quake last year, and generally standing firm against the global slowdown.
Is this Kiwi strength likely to continue?
Perhaps not. The New Zealand dollar has gained overnight, but not so much as you might expect given the economy’s performance. This is because, in recent months, New Zealand’s government office for statistics has earned itself a reputation for being unreliable, in that it tends to release optimistic figures, then later downgrade them. Because of that, last night’s data is being taken with a pinch of salt on the market, and the Kiwi dollar could fall back to earth if that strong growth proves illusory.
What else is affecting the markets today?
The New Zealand growth story aside, the markets have stood stock still since yesterday. Looking ahead, the latest UK retail sales could give the pound a boost if they prove optimistic, while European Central Bank president Mario Draghi is making a speech that might influence the euro. In short, attention is set to turn away from New Zealand back toward Europe today.
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I do hope this post has been useful. I will return with my next update tomorrow.
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