Kiwi or New Zealand Dollar is among the top 10 most traded currencies in the modern global financial market. And it is still considered as a reliable option by FX traders for stable diurnal and sometimes even long term trading strategies. NZD USD forecast is thus one of the most important currency pair forecasts in this forex trading market.
It is obvious that each currency has its own multitude of variables ascertaining and influencing it. New Zealand has its own share of such variables and each of these separately and collectively affects its price quotes and NZD USD forecast.
Factors from the past:
New Zealand currency went from British pound denominations to American dollar or decimal with the ‘Decimal Currency Act’ which was passed in 1964. This chunk of history is one of the major throwbacks to what NZD has attained up until now against USD. In addition to this, there are two other major events which have affected the present economic status of both country and currency together; viz. –
- A global commodity boom around the first decades of this 21st century which led to huge cash surplus and a highly valued NZD on FX market.
- The Reserve bank of New Zealand (RBNZ) sold an undisclosed amount of NZD for 9 billion USD to drive down its value and regulate it.
- The Great Recession caused much of the downfall of NZD USD forecast throughout the period forcing RBNZ to make greater financial decisions, especially making New Zealand economy a form of supremely functional free-market economy.
Major factors affecting NZD USD forecast:
The factors affecting a nation affect its currency from every aspect. New Zealand itself is country whose diversity is both its strength and vulnerability. Some of these major factors are listed as below: -
- Geographically, New Zealand is an island country and thus, most of its exports are based completely on maritime trading. Trading through oceanic trade routes has its own entanglements and it faces same problems as Australia does. Traversing international waters with cargo ships are subject to risks which can cause devaluation of the goods in concern thus increasing probability of incurring a hefty loss.
- New Zealand grossed a total $50 billion in exported goods. Major industries based on natural resources were dairy farming and log or wood industries which garnered record high prices in exports. With these industries primarily remaining unaffected by the early 21st century depressions, the currency outmatched most of its peers with powerful bottom economy strength in those regions of low-inflation and low negative GDP figures. It was so much so that it over-bounded most NZD USD forecast. It was even named as the ‘rockstar economy of 2014’. Some also claimed it to be the ‘hottest currency in 2014’.
- South and South-East Asia were the world’s fastest growing economic sectors. And keeping up with their huge demands of raw materials were both Australia and New Zealand. Demands from China, Japan, Taiwan and other Polynesian countries drove forex NZD/USD forecast ahead with a strong resistance and reliable low-risk investment sentiment for traders.
- Transparent government regulations and easy tariffs give New Zealand an open and free market economy. High purchasing power parity (PPP) and per capita income (PCI) rank it among 3rd in the Asia-Pacific region and among top nations as per global standards. This is one of the foremost reasons behind New Zealand’s rapid turnaround after the recession hit market as it managed to keep a low inflation rate.
All-time low government interest rates of 2.5% helped garner investments and cash in-flows. The government pro-FDI mentality and multiple shares in private companies stabilized this economy further. All in all, being a free market, it is considered as a reliable point for investment by FX traders thus giving it a stable NZD USD forecast.
A forex NZD/USD forecast for 2016-2017:
The economy seems to grow at a steady rate. Increased inflated rates of expansion are often followed by an abysmal fall; this does not happen to be the case as far as the current NZD USD forecast is concerned. A Q2 0.9% GDP growth is a mirror of previous growths. Reasons for this nominal growth are primarily that of a low yielding commodity market. A recent slump in dairy industry prices are also added to the downfall. However, this nominal growth is considered by experts as the minimum point and that there is only one way left ahead for this economy and that is upward.
The current NZD/USD stands in at around 0.73. The expected support levels average to a low 0.71 at best although experts are speculating as close as 0.69 sometime in the future. As far as forex goes, this situation only attracts investment with the economy already holding above its guaranteed minimum resistance figures in the upcoming future. A positive SSI index is one of many upsides for this FX currency pair.
Higher resistances at 0.75 suggest a bullish market in the future. With the country being one of the global pioneers in a free market economy and the upsurge expected in the commodity after the South China Sea crisis, FX experts speculate the market to garner a 20% increase by the end of this financial year.
Futures and factors affecting it:
Predicting the future in case of economics spot on is far-fetched; one can only speculate the factors which will affect the future instead of listing them comprehensively. Those which can be confirmed till the next financial year is that NZD will strengthen in the course under the persisting conditions. The major factors which might come into play in for future NZD USD forecast are: -
- Dairy Industry
Dairy exports are the largest single commodity exports of New Zealand accounting to nearly 29% of its total gross. And although prices in the New Zealand dairy auction has increased by more than 7% from before, future prices will come into play in determining both the industry and the economy. Speculations are that of a stable range of returns for this industry with positive effects on the forex market.
- Trading with Japan
International relations with Japan will be boosted with Bilateral Trade Agreements (BTA) slated to go through sometime between 2017. Trading with Japan directly, especially in the form of raw materials will be fruitful. With both these nations sharing a national policy of low interest rates, their trades might be the highlights of the upcoming years. Rate cuts from the Bank of Japan (BOJ) may come in handy for NZD to compete against AUD in getting an upper hand.
On other hand, if BOJ does not respond to the RBNZs ease on interest rates, this will subsequently power the Chinese Yen forward which will in turn look for high-yielding assets in the form of AUD and NZD. Thus, in other words, NZD futures are promising.
- A Strengthening USD?
This is the most anticipated point in forex market – future of the USD. Whether USA will be able to respond over China’s stunted growth and respond with a better GDP and PPP in upcoming years is what the whole world will be observing keenly. Recent trends indicate a stronger USD; but NZD appears to have better future prospects and with persisting conditions will aim at the 0.85 mark in the upcoming future.
Also, the lower comparatively NZD interest rates attract better investments in it. This is something which USD will be unable to do especially after Brexit as it aims to ground on both the Euro and the British Pound. Having this guaranteed momentum, the NZD looks to make the best of what it has – a free economy with high PPP and FDI prospects.
In short, NZD USD forecast will stay between the 0.68 and 0.85 marks; that which will give it a momentum is investors, FDI and Forex alike, investing in it.
Although, these are premature assumptions, the factors which have and will affect NZD USD forecast can be determinately singled out. Unpredictability is a nature of economics which can be affected by innumerable factors more than negligibly; but what can be pre-conceived so far is that NZD will be a currency to observe closely for any forex trader. The low interest rates and high yield probabilities still make a reasonably profitable long investment to make in forex. Thus, NZD USD forecast can be considered to be a positive one in the long-run.
Forecast. Invest. Prosper.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.