[Daffy]

http://www.stuff.co.nz/stuff/0,2106,3504030a13,00.html

Global investment heavyweight Goldman Sachs is advising clients to sell the New Zealand dollar, as it warns of a rapid slowdown in the local economy next year.


The local unit has rallied nearly 5 per cent over the past 2½ weeks, and was yesterday flirting with US72c. It also stretched its wings against the Australian dollar, trading at a post-float record of A95.83c.

But Goldman Sachs warned the New Zealand dollar was 20 per cent overvalued. The Wall Street bank's top trading tip for next year was to sell the kiwi and buy the Brazilian real.

In a report to its clients – which include billion-dollar investment funds – Goldman Sachs said New Zealand interest rates would fall next year.

When that happened, foreign investor support for the kiwi "could rapidly disappear".

That sentiment was mirrored by the ANZ Bank in its latest quarterly economic forecast.

"Yield related support for the New Zealand dollar will quickly dissipate as the market looks for the inevitable easing in restrictive monetary policy settings," the bank said.

[zardell]

And in simple, laymans terms this means......?????

:uhoh I'm sorry, but I just dont understand, Daffy. I've never been any good on things like this........wish I was.

A translation would be much appreciated.

Suppose it wouldn't do for us all to be the same eh?

x

[Daffy]

Basically I think it means the exchange rate to buy NZ$ will improve, we'll get more for our GB£ or US$. Unless I'm not understanding it correctly myself! Anyone else got an interpretaion?

[zardell]

Thanks for that Daffy - much appreciated.

[Aydon]

I thought it was the oppostie Daffy. People selling NZ$ will create a surplus - therefore 1 UKP will be able to buy LESS NZ$. At a 10% over-value, the rate will drop from 2.48 as current to around 2.24 - I don't believe a 20% over-value is realistic.

However, my A-Level Economics is VERY rusty so it may be as you said in the first place! Any Economic experts out there? :)

*edit* - Nope - ignore me, you're right Daffy.

Currently 1NZ$ will buy 0.4 UKP

So they are expecting 1NZ£ to buy 0.3 UKP next year. 1 UKP will buy 3 NZ$, not 2.5 as is currently.

Sorry - I only got a D ;)

[Daffy]

Well it says 1NZ$ is 72UScents, if it drops to 1NZ$=52USC then it'll only cost me 52cents to buy 1 NZ$, rather than 72USC.

Unless I'm missing something ?

[Aydon]

Nope - you're right :)

[Charlosparky]

So (sorry I am in the *airhead* catagory here) does this mean I am better to rent when I get to NZ next August and leave my £s in a UK bank whilst the exchange rate improves??? :uhoh

[veronica]

A lot of us hope it will improve well before next August. this has been predicted for a few months now. but this seems to be something positive to point towards it actually happening.

[zardell]

Well, Charlosparky, it would seem to me that you would be better off renting, but then again - what the heck do I know !!!

Just one question though - does this mean that mortgage interest rates and inflation will rise in NZ and if so, is that not just creating a 'swings n roundabout' scenario for us?

Oh Daffy - you've started something here Bud......... :roll

C'mon...there must be someone out there that can translate????

A.C.M.A anybody??

x

[Charlosparky]

:confused: A C M A :confused: Eh what???

Aubergines cure mild arthritis maybe??

or Australian Cabbages Mutate Annually????

Mmmm. Translations definitely required on this thread :roll

[zardell]

:laugh :laugh :laugh

ACMA is a financial/accounting qualification, but I like yours better. lol

x

[tigerlily]

http://www.stuff.co.nz/stuff/0,2106,3504030a13,00.html
...Goldman Sachs said New Zealand interest rates would fall next year. ..

I would hope that mortage interest rates would fall as well. Aren't they all sort of tied together?

[foolsgold99]

We're playing a game called balance. too much either way is a bad thing. The kiwi dollar is high now, because interests rates are high. People wishing to take advantage of the high interest rates here for their saving, need to purchase kiwi dollars to do so, supply and demand pushs price up (there is only a fixed, small ammount of NZD in the world). A high kiwi dollar is bad for business that export, as it pushes up the cost of their products overseas, making it hard for them to sell. When business suffers, rates fall to help them and simulate the economy. A high dollar also makes imports cheaper.

We need to remember what is good for one person, is equally bad for another. This is a classic zero sum game. Money simply moves from one person to another, it doesn't appear or disappear. An "improvement" in the rate for someone that has there assists in sterling or better still US dollars, is a bad thing for those who have theirs in kiwi dollars (i.e earns kiwi dollars, have a house here etc.) like me. The value of our earnings is less, items priced (Petrol being the main one) in USD become more expensive. You should always move to a country with a weakish currency, and leave one with a strongish one. This way you get the maximum bang for your buck.

Interest rates in NZ are some of the highest in the oecd, but long term rates are much lower. Have look at the weekly WestPac report for more details http://www.westpac.co.nz/olcontent/olcontent.nsf/content/FM_Weekly_20051205/

They forecast by March 07, one kiwi dollar will only buy .32 british pence, instead of the current 39p.

Most important thing to remember is, no one knows anything for sure about the future. Anyone that says they do is a liar or a fool. Don't put your life on hold waiting on rates to change or hit a magic number, they may never do. Live your life and enjoy, it's only money folks.

[Charlosparky]

"Don't put your life on hold waiting on rates to change or hit a magic number, they may never do. Live your life and enjoy, it's only money folks."

This is the most important bit. If the money really mattered most migrants stay in the UK. personally i'd rather have NZ lifestyle than NZ $ (within reason) :nice1

[StevieD]

D'oh I hate the money markets!! But I hope it is the better option! :laugh

[zardell]

Foolsgold99.

Thanks for your reply and helping to make sense of all this.......much appreciated.

Julie

x

[willsken]

"They forecast by March 07, one kiwi dollar will only buy .32 british pence, instead of the current 39p." (Quote)

Ok, not knowing much about the money markets, does this mean that it may start creeping back up next Aug time? (This is when we plan to leave the UK)

[veronica]

Got a crystal ball!

[Carol]

You could all be talking martian for me......


When we came we had so little money to bring it really didn't matter.


We're still in the same boat!
:yes


Ah well...
:cheers :nice1

[Radders]

I'll beieve it when I see it

[willsken]

Well I’m going to put my optimistic head on. It WILL be back up to at least $3 to the £ when I want to move!!! :laugh :laugh