Tag Archives: US Treasuries

NZ dollar on the slide


With the downgrade of the at the end of September the NZD/USD will remain volatile and the BNZ reckon that the price range for the NZ$ will remain between 0.7608-0.8573.

Standard & Poors – long-term foreign-currency credit rating – from AA+ to AA
Fitch – long-term foreign-currency credit rating – from AA+ to AA
Mooody’s – long-term foreign-currency credit rating – remains at Aaa

What is affecting the NZ$?
* concerns about European Sovereign Debt
* Decline in dairy prices – although a weaker NZ$ against the US$ can actually increase prices in NZ$ terms (milk powder is traded in US$).
* Investors now moving to the safe haven of US Treasuries – Treasury securities are the debt financing instruments of the United States Federal government, and they are often referred to simply as Treasuries. There are few alternative safe-haven assets out there that can match the depth and liquidity of the Treasury market

However with still relatively higher interest rates than most other developed nations (see table) there is the chance that the NZ$ will appreciate. Today the Reserve Bank of Australia (RBA) held its target cash rate at 4.75% as current global economic conditions have put the brakes on growth and inflation.