With a new government in New Zealand, the NZD has been on a roller coaster of emotions for quite some time. At first, the NZD seemed to be going on the rise and this created many questions about how long it would remain on the rise. The government, however, has been quick to reassure its citizens that the NZD will remain strong and resilient for the foreseeable future. In order to gauge whether or not the NZD can withstand the rise in the US dollar in the coming year, here is a review of the recent history of the NZD.
On January 6th, 2020, the NZD took a large hit when the Bank of New Zealand announced that it was cutting its interest rates to 0.5%, a move that was viewed as a reaction to the global financial crisis. However, while the interest rates were cut, the Government did not intervene and as a result, the NZD took a second hit in early March when the central bank said that it would continue to keep interest rates at its previous level.
As a result, the NZD was forced to follow suit with other major currencies in the world, and the US dollar began to rise against most of the major global currencies. This situation caused the NZD to drop and a rally in the US dollar took over. By the end of the month, the NZD was back on the rise and the situation caused many to question how long the NZD would stay on the rise.
However, despite the large-scale asset purchase programme announced by the New Zealand government, there has been no major movement in the NZD. Instead, the NZD has remained largely stable on a relative basis, but the strength of the USD has caused many investors to look elsewhere in their portfolio, particularly in Europe. As such, many believe that the NZD may be able to rebound as the US dollar continues to rise.
If the US dollar continues to rise and is stronger than most other global currencies, the NZD could take a second hit, especially if the UK economy begins to falter. However, the Reserve Bank of New Zealand has issued statements stating that the economic outlook in the United Kingdom is still good and that there is no need to take any immediate action. In order to determine whether or not the NZD can withstand a further rise in the dollar, it is important to compare the economic data between the United Kingdom and the United States. States in order to see how much of an impact on the UK economy has had on the US economy, and vice versa.
If the two countries are comparable on a fundamental level, it is likely that the NZD will rebound slightly from the recent decline. However, there is little evidence to indicate that the US government will change the current policy of increasing interest rates in response to the global economic crisis. In fact, some analysts believe that the US Federal Reserve is currently waiting to see if the United Kingdom will suffer a similar economic crisis to the one experienced by the United States in 2020. If the Federal Reserve believes that the UK will experience a recession in the near future, there is a good chance that they will increase their own interest rate in response to support the American economy.
If the US dollar starts to decline again in the United Kingdom, the NZD will likely rebound in a gradual fashion. However, if the United Kingdom is no longer able to withstand the increased US dollar and the NZD depreciates against the pound, then the NZD will start to fall sharply.
There are some commentators who believe that the Australian dollar has already surpassed the NZD in terms of purchasing power in relation to the US dollar and that the Australian currency may soon become the leading global reserve currency. In this scenario, the NZD would also become weaker than the American dollar if the dollar continues to depreciate. However, it is likely that the New Zealand economy will remain strong, so the NZD will probably not lose as much as the Australian dollar will. However, it is important to understand that the New Zealand dollar is highly volatile and therefore, any fluctuations will occur at a very fast rate and will occur against one of the major currency pairs.