Currency Talk: NZ dollar up the stairs and down the elevator shaft
Jason Walls and ASB's Tim Kelleher discuss the global currency market news on NBR Radio and on demand on MyNBR Radio.
Hot Topic
Hawke’s Bay
Analysts putting their bets on a US Federal Reserve rate hike this week are 50/50 for and against but that's quite a change from last month.
ASB’s head of FX Tim Kelleher says in August, 82% of surveyed economists expected a September hike.
But he says now, just days away from the decision, 46% are expecting a move.
NBR reporter Jason Walls says the economy has recovered since from when the rates were dropped to 0.25% post-GFC.
He says it’s no longer sustainable to keep rates so low.
Mr Kelleher agrees.
“Equity market are at record highs, housing above pre-GFC levels, there is no excuse other than they have already gone [to hike rates],” he says.
But, he adds if the Fed doesn't pull the trigger on Friday (New Zealand time) then maybe they will hold off until December.
Mr Kelleher says a rate hike will be a problem for emerging markets, as the money which had been invested there is moving back to the US, which will be exacerbated further by a rate hike.
Mr Walls noted the IMF says that between 2009 and 2013, emerging markets received about $US4.5 trillion of gross capital inflows, representing roughly half of all global capital flows in that period.
Mr Kelleher says he is forecasting the New Zealand dollar to be at approximately 60c against the US dollar by the end of the year, and as low as 58c by the end of March next year.
“The kiwi dollar is described as up the stairs and down the elevator shaft and it’s a very small door when everyone wants to exit,’ he says.
Use MyNBR Tags to track people and companies — and receive key-word email alerts. Find out how here.
NBR Radio
Tue, 15 Sep 2015
Tue, 15 Sep 2015
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Currency Talk: NZ dollar up the stairs and down the elevator shaft
51569