NZ dollar almost at 70US

[Sgt Seb]

has anyone taken advantage of this yet? im thinking of ordering some pc hardware from overseas, but ive never done it before. good idea?

[Odysseus]

Ok, can someone explain to me how a country's currency can stably increase in relation to the world market.

For example, a few years ago, the USD was considered a strong currency. Thus it took more New Zealand coin to buy a USD.

So, now when the New Zealand dollar increases in value against the USD, it hurts exporters because it costs more foreign currency to buy New Zealand dollars.

Now two things comes to mind about an economy. The more exports do you, the better your economy does. However the better the economy the more the dollar increases. This is an assumption in itself, but it sounds right. So based on these two seemingly conflicting things, how does an ecomony improve with both the "economy" doing well and exporters having a good breeding ground?

[ZengE]

I'm taking advantage of the fact that the US dollar is so weak every day. The Malaysian Ringitt is tied to the US Dollar so if the USD is not performing well then neither is the RM and the good old kiwi buys you a lot more.

[Heresy]

i blame the maori

[MoP]

I blame George Bush

[mpx]

Originally posted by ZengE
I'm taking advantage of the fact that the US dollar is so weak every day. The Malaysian Ringitt is tied to the US Dollar so if the USD is not performing well then neither is the RM and the good old kiwi buys you a lot more.

They.....can?

hmmmmm

[Josh]

Originally posted by Odysseus
Ok, can someone explain to me how a country's currency can stably increase in relation to the world market.

For example, a few years ago, the USD was considered a strong currency. Thus it took more New Zealand coin to buy a USD.

So, now when the New Zealand dollar increases in value against the USD, it hurts exporters because it costs more foreign currency to buy New Zealand dollars.

Now two things comes to mind about an economy. The more exports do you, the better your economy does. However the better the economy the more the dollar increases. This is an assumption in itself, but it sounds right. So based on these two seemingly conflicting things, how does an ecomony improve with both the "economy" doing well and exporters having a good breeding ground?

Exchange rates are also affected by interest rates. NZ already has high interest rates internationally which attracts foreign investments. This demand for dollars pushes the price up.

I guess another way of looking at it is that if NZ offers 5% over 12 months whilst the US offers 2%, investors will buy investments with $NZ up until the point where you would expect the currency to increase relative to $US to nullify the gain in higher interest

It's a moot point about whether countries should keep their dollars underpriced or not but that is a big part of what drives it. It is going to start hurting New Zealand companies as their hedges are starting to run out.

[TD]

Originally posted by Odysseus
Now two things comes to mind about an economy. The more exports do you, the better your economy does. However the better the economy the more the dollar increases. This is an assumption in itself, but it sounds right. So based on these two seemingly conflicting things, how does an ecomony improve with both the "economy" doing well and exporters having a good breeding ground?

That's the trillion dollar question. It is extremely difficult to balance growth against inflation, a low dollar against a high dollar, consumer spending against exports etc. There is a reason why the Reserve Bank governors job is one of the highest paying in New Zealand

This is a good article on the effect of the value of a countries currency - http://www.chicagofed.org/consumer_i...eak_dollar.cfm - although it is from an American perspective; most of it applies to any country,

About the strong NZD, it is not so much a case of the NZD being really really strong at the moment (although it has definitely improved against most nations due to its relative stability and our higher than average interest rates) than the USD being really really weak. The US currently has extremely low interest rates in the hope that consumers and businesses will borrow and spend more and exporters will export more to help stimulate the economy. Because of these low interest rates people are moving money overseas to countries with higher rates, causing the value of the USD to fall (although the US's trade deficit and the general shift away from the USD as a common currency in some commodity markets isn't helping the demand for it either).

[ipee]

Originally posted by Odysseus
Now two things comes to mind about an economy. The more exports do you, the better your economy does. However the better the economy the more the dollar increases. This is an assumption in itself, but it sounds right. So based on these two seemingly conflicting things, how does an ecomony improve with both the "economy" doing well and exporters having a good breeding ground?

NZ's economy is doin Ok but i wouldn't call it an economic boom by any stretch of the imagination. The increase in value has more to do with the weak US economy than anything else. Going by your assumption there is still plenty of room for the NZ dollar to keep rising.

[Spidey]

I'm going to buy $1000 US dollars and wait a year for it to fall and make about a 30% profit

[s0nic]

my mate is going nuts at amazon.com :P
he bought the transformers season 1 set AGAIN cuz his current one had a small dent at the bottom of the case.

i think i might spend some money as well soon......

[Josh]

Originally posted by Spidey
I'm going to buy $1000 US dollars and wait a year for it to fall and make about a 30% profit

Except that you will pay about $25 to transfer it internationally, and $25 to transfer it back.

Plus, assuming you could invest that amount in a term deposit, you would make about 2%p.a. versus the 6% they are offering in New Zealand.

Yeah, maybe you will make some money. But with the amount of risk and the costs, maybe you should just buy shares in a NZ exporter while they are doing badly.

Just a thought. I'm tempted to do that too, although probably buying shares would be a better option

[Spidey]

i would buy shares but the fact of the matter is the NZ stockmart doesn't exactly have many new shares that are there so you can make a quick buck or two. I'm not aiming for anything long term here and most of the shares in the NZX50 doesn't change all that much anyways. Although i could be wrong i'd go with the buying of the US dollars, much more certainty that way

[avn33]

yeah its good for those who wanna buy offshore. But not good for those who wanna buy here. Which is a shame.
I just picked up an apple ipod for overseas for $249us. at the moment thats like $350NZD! Good deal i think. If i had more money, id be buying more stuff thats for sure.

[GRiM ReeFer]

Originally posted by Spidey
Although i could be wrong i'd go with the buying of the US dollars, much more certainty that way

ha ha.

[grumps]

If you're going to order hardware from the US, I'd recommend http://www.newegg.com/ --- just make sure to check their policies on international shipping. Their domestic service is excellent.

[BathTub]

yeah time to start getting some of the things that I have had on wish lists for a long time. I am putting a bunch of orders together, just did one 9 cd CDBaby order. sort of stuff I had been putting off because it was like 1 or 2 items from each store, but now since I am heading over in a few weeks, I'll get em shipped to dad and just bring em home with me.

[PsyK]

this is REALLY bad!!!!, we need our dollar to stabilize or the goverment will crash it back down for our exporters, hurting consumers.

[cyc]

Originally posted by PsyK
this is REALLY bad!!!!, we need our dollar to stabilize or the goverment will crash it back down for our exporters, hurting consumers.

Remember, you're making one incredible assumption and it's almost certainly false.

The NZ government is not capable of changing the value (pr perceived value) of the US dollar. The NZD is strong against the USD because the latter is weak.

[CCS]

Originally posted by cyc
The NZ government is not capable of changing the value (pr perceived value) of the US dollar. The NZD is strong against the USD because the latter is weak.

But it's hurting consumers! Somehow. And baby jesus!

[cyc]

Originally posted by CCS
But it's hurting consumers! Somehow. And baby jesus!

Hahaha. You know, that quote actually does sum up (to a certain extent anyway) how NZ governments work. Whichever group that complains the loudest usually gets the most attention.

[Beccara]

Originally posted by cyc
Remember, you're making one incredible assumption and it's almost certainly false.

The NZ government is not capable of changing the value (pr perceived value) of the US dollar. The NZD is strong against the USD because the latter is weak.

umm yes the can affect the exhcnage rate, in a extreme case the and take money or put money in circulation to control the value of the doller, which is being hinted at if the doller stays stable above 70

[Lightspeed]

Originally posted by cyc
Hahaha. You know, that quote actually does sum up (to a certain extent anyway) how NZ governments work. Whichever group that complains the loudest usually gets the most attention.

Buddy, (to a certain extent anyway) that's how democracy works.

[Beccara]

the world market tends to move in a wave, and you can see this when you look at 10-year history of markets they all have a cycle,

the thing thats got this govt spooked is this
http://www.ela.co.nz/CurrencyGraph.c...3b18d1bfc483c0
3rd Sept 2001 = $0.42
3rd Feb 2004 = $0.67


now then the time difference is 41 months and the difference is $0.25c

3rd Jan 1994 = $0.57
3rd Mar 1997 = $0.70

time difference is 38 months and the difference is $0.13

Now that means there has been $0.0061 Chance per month resently BUT in the mid 90's there was $0.0034 per month

Now i'm aware thats a little ruff and there are other factors BUT it still remians that the rate at which the doller has changed is ~200% on what it was.

Exportes like any company look and plan ahead but no one REALLY thought it would go this high this fast. and i tend to agree that steps need to be taken to protect exporters a little more

[cyc]

Originally posted by Lightspeed
Buddy, (to a certain extent anyway) that's how democracy works.

Anything else that everyone knows you'd like to tell us?

Of course, we also know that mere pandering isn't all there is to democracy. Next, please.

[Lightspeed]

Originally posted by cyc
Anything else that everyone knows you'd like to tell us?

Of course, we also know that mere pandering isn't all there is to democracy. Next, please.

lol
You're kidding right? You know how many people there are who actually take the time to consider stuff like that? Not many. If any.

I mean, I basically said that same thing you said in your post, the NZ Government being a democracy. Why don't you quote yourself with the same reply.

[GRiM ReeFer]

lightspeed, deep insightfull thinking on your part may just be common knowledge to the average man... ?

[cyc]

Ouch!

Harsh/true