[karltsmith]

The current stong kiwi Dollar looks bleak for us all but take heart! Page 6 of this economic report indicates that it will weaken by December 2004 to £1.00 = NZ$3.00 and if you want to invest your cash off-shore for a while before you buy NZ$ it could go as far as £1.00 = NZ$3.3 by Dec 2005. Also the housing market is cooling down appreciably and net migration is very low at 15,000 this year!!!!! These are very strong factors in favor of a weaker dollar!


All good news if you can be patient!


http://www.westpactrust.co.nz/olcontent/olcontent.nsf/content/FM_Weekly_20040823/$FILE/NZWC2308.pdf?Open

Karl :nice1

PS I'm off to another house auction tomorrow....Hmmm me thinks I might take some of my own advice if the price isn't right!

[Raeven]

karl... I think I love you!!! :nice1

The whole currency exchange thing has really got my stomach flopping. If the US dollar follows a similar track as you suggest, it would all work out extremely well for us, as we don't think we will be able to complete a property transaction before December. Maybe, though.. we do have our eye stuck on one pretty hard, and the sellers are keen!! Gaaahh, who knows??

Anyway, your news is the best I've heard in a long while on the currency front. Thanks so much for keeping us apprised!

All the best, Rae

[Dianne42]

Very helpful info, Karl - and thanks for the useful link. Now if we all keep our fingers crossed at the same time, do you think we could make it happen a tad faster? ;)

[Tara Sage]

Thats great news! :nice1

We still have some money to transfer so :nice1 a nice exchange rate would be fantastic.

Thanks Karl

[markkellaway]

Mmmm, starting to get depressed at the wait for PR after August 18th selection, perhaps that will be a good thing, an extra 30 - 40k NZ will be VERY useful!!

Cheers Karl,

Mark. :D

[Radders]

I see the report is dated last week of August.
Am I right in thinking that by end of September the report predicts an exchange rate of 2.85 (35p). Already this looks decidedly dodgy. That's a shift of around 15 cents in 3 weeks from the best I can get at the moment.

[karltsmith]

This is only a forecast and cannot be tied down too precisely as it is generated from long term financial indicators hence it could be out by a few months here or there.

The next big thing to affect the value of the Kiwi will probably be the US elections! You would do well to keep an eye on the exchanges around this time if you plan to exchange on a spot price! Altenatively you can place a 'Market Order' which will allow you to buy at a set price as the rate moves towards your preset buying price. You only then need to pay 10% deposit on the currency and can settle several months later if you wish!

[Woz]

This is only a forecast and cannot be tied down too precisely as it is generated from long term financial indicators hence it could be out by a few months here or there.

The next big thing to affect the value of the Kiwi will probably be the US elections! You would do well to keep an eye on the exchanges around this time if you plan to exchange on a spot price! Altenatively you can place a 'Market Order' which will allow you to buy at a set price as the rate moves towards your preset buying price. You only then need to pay 10% deposit on the currency and can settle several months later if you wish!

I take it that the market order means that if the exchange rate moves away from your target price again you are in trouble as you could have to wait a while.

We have cash we want to move into NZD but are looking for the best route at present.

[karltsmith]

A market order is an instruction placed by a client to buy currency at a particular rate. An 'exotic' commodity currency like the NZ$ attracts a lot of speculators due to the massive swings possible, 2.6 to 3.3 to the £1 !

Such speculators who are currently investing in the NZ$ will have short stops on their investments i.e. a stop loss so that should the dollar weaken suddenly their brokers will cash up before the swing wipes out all their profit. The effect of this should it happen is to weaken the currency further and can create some very sudden swings in value! The trick is to catch the dollar as it weakens. When we came out in March 2004 the rate was about the same as it is know and things looked pretty gloomy. As things kicked off in Iraq and the oil stopped pumping the dollar weakend to NZ$2.98=1£! This was an opportunity to buy at a good rate!

Back to market orders and hedging your bets! The one thing you should not do is to do nothing! This will only cost you dearly in the long run! So you need a game plan!

Our game plan was this. First only change as much currency as you need to live on for the first few months and put the rest into a high interest account....ours is offshore in the CI's. This will accrue at about 4.75% gross. Place serveral market orders with a broker to buy your currency in chunks as the dollar weakens e.g 50,000 @ 2.85 50,000@2.90 and 50,00@2.95. This way you have a chance of catching the peak and on average you will do OK. You may want to consider a stop loss i.e an instruction to buy at eg 2.69 if the currency starts to swing against you!

A broker trading in the Kiwi Dollar will charge about 200 pips comission i.e if your order is to buy at 2.8500=£1 the currency must reach 2.87=£1 before your boker will buy.

Your deposit for currency bought in this way is due on a 3 day account with the remainder due 1,2,3 or say 6 months later depending on your agreement with your broker. You get no interest during this time ...it goes to the broker that is how he/she finances the purchase.

You can also elect for a market watch which basically means your broker will call you as your buying point is reached and on authorisation from you, will buy at 'spot' price. You will need to settle the entire account within 3 days or the currency will be re-sold at your expense!!! You can see that for the latter case you need to have liquid assets. However for those of you with a longer time frame who at least have some liquid capital a market order arrangement will allow yoou to take advantage of a weaker Kiwi without the need to settle immediately! You need to be patient to get the best out of a market order!

You must of course also be mindful of the property market in NZ which currently is flattening of and dipping slightly and will probably remain so for a couple of years beofre the inflationary cycle begins again!

Currently the next 'Big' thing to happen on the world stage is the US elections and this could strongly affect where the US dollar goes!

It's a dilema we will all face and in the end you have to try and balance all factors in order to come out on top! If the property makrket surges ahead again it can also cost you dearly and you end up paying an 'opportunity cost' for not acting!

:nice1

[Woz]

Thanks for the detailed info.

We have liquid assets at the moment earning interest so are looking for the best route in with our cash. We got rid off our house just before the peak of the UK market :)

I am UK based so will look at how the UK£->NZD is looking. Should I watch the USD as well as this normally impacts the UK£ as well?

I get the feeling the UK£ will start to weaken soon as tax hikes, oil prices, interest rates & inflation start to bite. Now the population is so much in debt the rate rises will have a huge effect on disposable income which can only have a negativee effect on the economy.

I will contact a dealer and find out their view and set up the orders.

Thanks again for the response

[Radders]

This exchange rate is becoming silly! Somebody over there should say something!It must be crippling the nz export market. It seems like everyday I'm losing a weeks rent !

[veronica]

We bought two houses last week and it felt like a lot more than a weeks rent. :wah

[Moorf]

We were offered 2.62 by a money broker today :?

[Radders]

Been splashing the cash eh veronica! :mrgreen: