New Zealand Kiwi Is Outperforming the Dollar

Commodity-linked currencies, led by the New Zealand Dollar, moved sharply higher versus the U.S. Dollar in Monday’s trading in Sydney. As reported at 10:35 a.m. in Sydney, the U.S. Dollar Index, a measure of the greenback’s value versus a group of major currencies, traded at 75.646 .DXY, a decline of .23%.

The New Zealand Dollar rose 1.7% to $0.7370, the highest trade in nearly 2 weeks, following the news that New Zealand dairy producer, Fonterra Cooperative Group, Ltd., increased their payout to shareholders by nearly 20%, mirroring the rise in global dairy prices. Dairy accounts for the largest percentage of exports from New Zealand farmers, and the Fonterra Group is the largest dairy exporter in the world. The Australian Dollar also moved higher versus the U.S. Dollar, rising above $0.9200.

Further suppressing the U.S. currency was the worse-than-expected non-farms payroll data out of the U.S. which was released last Friday. The U.S. Labor Department reported that 190,000 jobs were shed in October, spurring the U.S. unemployment rate to a quarter-century high of 10.2%. One currency strategist commented that the data can be interpreted to mean that the Federal Reserve will continue to keep interest rates at historic lows.

Comments

[athena:]

If the dollar keeps going down our exports will should soar eventually.
This country should become attractive to manufacturing again.
Or we may be racing to the bottom in earning power because of taxes, regulations and lawsuits that other newer exporters don't have.
I am betting on the latter since this administration doesn't quite get it.

Nov 09 10:38 AM

[bob adamson:]

On the other hand, if one looks at the record of the past 30 years the New Zealand Dollar (and those of Australia and Canada as well) were deeply discounted against the US Dollar. Much of the recent appreciation in those currencies is simply a rebalancing. Arguably many people of the US are too inclined to be pessimistic at present and focus on exchange rate fluxuations to that end. We all (I'm a Canadian) have our share of economic challenges at present but expect that the US will arise to the occasion (as, hopefully, will we all).

To put things in a different perspective, think how New Zealanders felt when their Dollar was recently worth about 50 cents US. They seem to have recovered.

Nov 09 08:52 PM