Korean Job Discussion Forums

julian_w · Posted: Tue Mar 11, 2008 9:54 pm Post subject: $NZ about to go through the roof?

The NZ dollar has been going up like it's stuck with gum to the floor of an escalator... but how long that escalator is: who knows?

What is known is that next month, New Zealand and China sign a free trade deal that has been in the works for years. It's the first free trade deal China's signing with a 'western' nation. (As a New Zealander, I'm not proud of it.)

What I don't know is what it's going to do to the NZ dollar. I presume the dollar has been going up partly because the economy there is still relatively good, while the rest of the world (ie. more directly influenced by the States' economy) goes into the post Bush-Cheney tail-spin. I suspect the other part of it is that investors are guessing the free trade thing will be good for NZ, and so are going to be investing more.

So, any predictions? Is the dollar going to go through the roof next month? One $NZ equals one $US? One hundred NZ cents equal to one thousand Korean won... and rising?

Kim Jong Jordan · Joined: 13 Mar 2004 Location: The Internet

I'm hoping it drops like a mofo, I'm paying my tuition for teachers college in the next two months there.....

dalpengi · Joined: 08 Dec 2006

NZ economy is not in a good state.

NZ has had decent growth rates in recent years but only compared to
our own historical data.

Slovenia's GDP per capita in 2007 has matched ours. That's right - we have the GDP of East European country. Hungary and Czech Rep will overtake us within 3 to 5 years.

When you compare our growth rates to other major English speaking countries... well, don't.

And now this:

Omens of recession seen in economy

dalpengi · Joined: 08 Dec 2006

Btw, NZ dollars strength is linked to our incredibly high interest rates, not our economy (though a strong economy usually leads to high I.R.).

kiwiduncan · Joined: 18 Jun 2007 Location: New Zealand

It's pretty damn frustrating.

Has the continuing rise of the kiwi dollar had an influence on how long kiwi teachers might consider staying here in the future?

I'm trying to keep in mind that if I get a better contract after summer the increased pay rates should help me maintain my savings goals.

nzfooty · Joined: 28 Jul 2007

Well, the word on the street is that the Reserve Bank will cut interest rates which will see the dollar drop in value.

wormholes101 · Joined: 11 Mar 2003

OneWayTraffic · Joined: 14 Mar 2005

afsjesse · Joined: 23 Sep 2007 Location: Kickin' it in 'Kato town.

Also, the USD is in worse shape. We're talking 1000 to 1 in the matter of a week probably. How bad is it going to get?????? I need a strong won! Not going to happen though. I'd like less then 1000 though... is this possible in the near future?

Cheonmunka · Joined: 04 Jun 2004

I think of people buying into the NZD now are suckers. They think, "Yippee we are earning 10% on our 200k locked in for one year." I suspect they don't really figure in that when the recession hits, likely within the year, they'll be losing 20% right off from the currency value + transaction fees of + 2%.
The NZ government has lost profit by investing heavily of our superannuation funds by putting them into USD's and bringing it out again at a loss. God knows why they did it but they've lost the safe surplus and put the accounts into deficit.
As someone said, NZ GDP is not good. Manufacturing is low. Exports are suffering heaps. I'm not buying NZ made right now. Who else isn't?Immigration is way down. So are new entrants into the property market. I have dropped 10% off market to try and sell my small house there and get my money out of NZ but I can't get a sniff of a buyer.
Strangely, through all of this employment is strong. Tourism is too. But with the strong NZ dollar I wonder how it can continue to turn. Where's the investment into infrastructure and manufacturing? Having your NZ earned money in an NZ bank is much safer than investing in property or shares. Having a job is more cost effective than investing in business. Renting is now far, far cheaper than buying.
I think we will see a recession there soon. It can't go on. Selling your USD's or Yen or KRW to buy NZ at such an historic premium seems insane.
Will I be eating my hat? We'll see ...

billybrobby · Joined: 09 Dec 2004

wormholes101 · Joined: 11 Mar 2003

One of the main reasons the NZ dollar is so strong at the moment is because investment managers are buying NZD on overnight rates because of the high interest rates. The moment interest rates get cut down, you'll see a lot of selling and it should drop a significant amount. That's my prediction anyhow Smile

nzfooty · Joined: 28 Jul 2007

Cheonmunka · Joined: 04 Jun 2004

Headline in today's NZ Herald: North Shore Hospital resembles refugee camp.
Things don't bode well for the country with the highest trading bank interest rates in the World.

crazylemongirl · Joined: 23 Mar 2003 Location: almost there...

The NZ economy has a lot of things good about it.

Dairy is going like clappers at the moment. Fonterra is forecasting a record level of payout which will give the average farmer on average a second divison lotto payout.

There is oil production happening in Taranaki and exploration happening in the south and east in the next few years.

Which has seen our trade defict shrink.

Australia is also in a boom which impacts upon us.

However
A lot of people are up to their eyeballs in debt speculating on the property market. Fuelled by cheap money coming in from overseas, banks have been lending money to people borrowing against the rising value of their house.

The reserve bank has been trying to stop this by increasing interest rates which has attracted more oversseas money into new zealand via japanese housewife investors which is driving the dollar up and hurting exporters.

Thins could get ugly especially with the drought.