Researchers chart dollar doldrums

10 October 2006

Researchers chart dollar doldrums

The Kiwi dollar has been called one of the world’s wobbliest currencies, but finance researchers at the University of Waikato Management School say there’s evidence to show that there’s a pattern in the ups and downs of the dollar.

Writing in the latest Regional Economic Bulletin, Dr Philip O’Connor and Dr Dani Foo report research findings showing that the NZ dollar follows an eight-and-a-half year cycle from peak to peak. If they’re right, they say, the Kiwi dollar will hit its next low in September 2009.

Their findings are based on historical exchange rate data, backed up by identifying a discernible lagged relationship between the price of the Kiwi dollar and two fundamental indicators: NZ/US interest rate differentials and New Zealand’s current account deficit.

The Regional Economic Bulletin (REB) is edited by Associate Professor Warren Hughes and published by the Department of Economics at Waikato Management School.

The latest issue also carries articles on valuing the natural resource ecosystem services in New Zealand, and on analysing linkages between primary and processing sectors to further develop regional economies such as Gisborne, Hawkes Bay, BOP and Waikato.

The REB is available free by subscription from Waikato Management School. A pdf is also available online by visiting www.management.ac.nz/departments/economics and clicking on Research and then on Economic Bulletin.

ENDS

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