NZD Gains as Markets Applaud Fiscal Coronavirus Response - Please be advised, the two main currency pairs in the New Zealand economy are the US Dollar (USD) and the New Zealand Dollar (NZD). Both countries' currencies are used interchangeably within their respective markets. As the New Zealand Dollar has a significant status as a reserve currency, it is of interest to see what is the effect of the fiscal contagion on its exchange rate.
When there are financial crises or even periods of time when there are financial outflows of capital, it may become more difficult for the New Zealand Dollar to appreciate against the US Dollar. This may make the NZD more valuable, but it can also mean that a large portion of foreign investor's funds are not repatriated because they remain in New Zealand.
Recently, there has been an outpouring of news about government agencies of other countries, particularly those in the European Union, being involved in all sorts of illegal activities. We have seen significant amounts of money coming out of the European Union, with governments stealing from citizens and possibly even stealing from the tax coffers of member states.
The cause of this has been the ongoing failure of the Euro to perform as a currency of trade. In some cases, it has lost its status as a currency. It is important for the New Zealand economy to be able to remain competitive, but the fear of large-scale loss of investment is real, particularly if any kind of recession is to occur in Europe.
So how can the New Zealand economy to capitalize on the fact that the European crisis is a risk and one that it can mitigate? Part of the answer lies in the current efforts to eliminate New Zealand Government Debt. In fact, when it comes to taxation and ensuring that money is spent in the best interests of all parties, the KiwiSaver system is also a big part of the solution.
Financial planning and financial infrastructure have advanced to such a level that the need for high levels of savings to service existing debt and future debt has been taken away. It is significant that we are seeing the benefits of this change as, as earlier stated, the recent period of financial crisis has left us all rethinking the role that we play in the markets.
In New Zealand, we can also look to financial institutions as the solution to helping with the fiscal contagion. The implementation of a relatively "New Zealand-first" regulatory framework means that the New Zealand Government can better protect its citizens from foreign control of our finances. The change can also help keep our prices at a competitive level and thus increase our returns.
The NZ Finance Minister's program of promoting the performance of financial institutions to the benefits of all parties is a perfect example of what can be done. It means that this program is targeting the management and companies and promoting the integrity of our society and economy. This is a great opportunity for both the financial institutions and the government to better manage their resources and to do so in a manner that will benefit all.
This means not only investing in New Zealand's future, but the affordability of the services and products of the private sector, while allowing our neighbours to benefit as well. Our "coronavirus" is here to stay, and we can continue to mitigate the impact.
There are further measures that can be put in place to make the New Zealand economy stronger through more resource efficiency. For example, reducing waste in the industrial sector is beneficial in itself. The introduction of fair wages for all sectors of the economy is also a measure that will help us to minimize the financial contagion.
Importantly, fair wages allow for a greater flow of labour from overseas. Again, this is a positive move that should help bolster our economic growth in the short term.
Therefore, as long as we're not faced with a systemic financial contagion in the near future, there is every reason to allow for a more proactive approach in managing the risks. all of the risks.