Political turmoil and turbulence of the currency market and the rise in the USD did not shutter stability of the New Zealand dollar.
Although unexpected resignation of the New Zealand’s Prime Minister this week did cause sharp decline in the NZD, (as this resignation might have led to political uncertainty, which can have negative effect on the business confidence in 2017), the NZD quickly regained its position in the foreign exchange market.
On Thursday, new Prime Minister, Bill English presented revised budget for 6 months, which showed that GDP growth in the next five years will go up by 3%. The budget also shows the increase in the budget surplus. Graeme Wheeler, Governor of the Reserve Bank of New Zealand, also made optimistic outlook of the economy, which is developing at one of the highest pace in the world.
The increase in US interest rates will support the USD; however the rising commodity prices will support the NZD.
The auction of dairy products, which was held 2 weeks ago, showed the rise in the world prices of dairy products by 4.5%.
Price index for dairy products, which was released on Tuesday showed the rise in price by 3.5%. Note that milk powder is the main item of the country's exports. The rise in the prices of dairy products will will continue to support the NZD.