Top Scoops

Book Reviews | Gordon Campbell | Scoop News | Wellington Scoop | Community Scoop | Search


NZ dollar rounds out worst year since 1984

NZ dollar rounds out worst year since 1984, set to go lower

By Paul McBeth

Dec. 31 – The New Zealand dollar capped off its worst year in 24 against the U.S. dollar, and is likely to extend its decline as the global economy deteriorates in 2009.

The kiwi dollar fell 25% against the U.S. dollar this year, the most since it plummeted 28% in 1984 when the currency was devalued by the Lange government. Reserve Bank Governor Alan Bollard told a media conference this month that “very low growth” forecast for the next four quarters as the recession abates. Some economists predict the economy will continue to contract in the first two quarters of next year as the global slump extends into Asia.

“As people come back in the New Year and their worries about the recession continue, the dollar will fall again,” said Danica Hampton, currency strategist at Bank of New Zealand. “When the economy finds its feet, the dollar will climb.”

The kiwi fell to 57.68 U.S. cents from 58.16 cents yesterday, and dropped to 52.07 yen from 52.46 yen. It was down to 83.40 Australian cents from 84.07 cents, and declined to 40.85 euro cents from 41.11 cents.

Hampton said the New Zealand dollar may trade between 57.40 U.S. cents and 58 cents today. She said the kiwi should hit a trough early next year when it may go as low as 50 U.S. cents and 45 yen.

She said central bank interest rate cuts and fiscal stimulus worldwide should help the global economy recover in the second two quarters of next year, but “if the world worsens, then the risk is the currency will fall further.”

In a sign that the domestic recession is affecting consumers, November household borrowing in New Zealand fell 0.1% to NZ$174.3 billion, the first monthly decline in 17 years, as they pull back on their exposure to credit.


© Scoop Media

Top Scoops Headlines


Scoop HiveMind Project: Universal Basic Income - Are We Up For It?

This is an opportunity for you as one of the 4 million potential funders and recipients of a Universal Basic Income to collectively consider the issue:
1. Is UBI is a desirable policy for New Zealand; and
2. How should a UBI system work in practice. More>>


Lyndon Hood: National Announces Plan To Hit Youth With Big Mallets

The National party has announced its youth justice policy, which includes a controversial plan for recidivist serious youth offenders to be hit over the head with a comically large rubber mallet. More>>


Lyndon Hood: This ->

It's been brought to my attention that Labour's new campaign slogan is "Let's do this". A collective call to action. A mission. I myself was halfway out of the couch before I realised I wasn't sure what it was I was supposed to do. More>>


Scoop Hivemind Report: What New Zealanders Think About Affordable Housing

Ordinary citizens have had very few venues where they can debate and discuss as to what they believe has led to the crisis in affordable housing and how we might begin to address this. The HiveMind on affordable housing was about redressing the balance. More>>


New Hivemind Exploration: Opening The Election - Freshwater Quality

This is an opportunity for you as one of the 4 million guardians of our common water resources to help us find mutually agreeable solutions to the critical task of collectively managing these resources for health and sustainability. More>>