New Zealand Dollar (NZD) and the US Dollar (USD)
New Zealand is often viewed as a country with slow growth – where things are made or grown rather than an interesting country of bright ideas and high productivity. As such, the general consensus in the early 1990s is for the New Zealand Dollar (also known as the “Kiwi”) to continue a long term depreciation against currencies of more “interesting” origin, like the Japanese Yen, the US Dollar and even the Australian Dollar.
Indeed, between year 1996 – 2000, the New Zealand dollar depreciated from 1 USD = 1.41 NZD to an exchange rate of 1 USD = 2.5 NZD, a steep 44% decline. The depreciation trend has since reversed over the years. For a while, it seems like things are not as gloomy for the New Zealand Dollar as predicted – until the financial crisis which started in Oct 2008 rocked the stability of the New Zealand dollar again.
From a rate of 1 USD = 1.49 NZD just before the start of the financial crisis in Sep 2008, the New Zealand Dollar depreciated to 1 USD = 1.94 NZD in Feb 2009. This represents a Hugh swing of 35% drop in value of the New Zealand Dollar. Fortunately for most New Zealanders, their national currency has rebounded back to a current level of 1 US Dollar compared to 1.44 New Zealand Dollar.
While most currency and forex traders attribute this trading trend as consistent with other major currencies (where an increased risk appetite from a global economy recovery (more…)
