Aussie / Kiwi Dollar Cross Rate

[bendix]

Do any of the more financially savvy members have any insights into why the Aussie is looking so strong against the Kiwi at the moment. A month or so ago an Aussie dollar bought around 1.08 Kiwi. Last week it was 1.12. Today it's around 1.15.

I have nearly A$400,000 in an instant access online account earning 5.5% in Australia. I have an NZ passport and have been offered a 90 day term deposit rate of 7.4% with my NZ bank. It's a better rate, the tax issues are more advantageous and with the Kiwi weaker at the moment, it looks like a good bet all round.

The stumbling block, though, is just how weak the Kiwi could still go.

I'm out of touch with the Kiwi economy. Are there any reasons why it's tumbling so much?

[Vegemite]

Do any of the more financially savvy members have any insights into why the Aussie is looking so strong against the Kiwi at the moment. A month or so ago an Aussie dollar bought around 1.08 Kiwi. Last week it was 1.12. Today it's around 1.15.

I have nearly A$400,000 in an instant access online account earning 5.5% in Australia. I have an NZ passport and have been offered a 90 day term deposit rate of 7.4% with my NZ bank. It's a better rate, the tax issues are more advantageous and with the Kiwi weaker at the moment, it looks like a good bet all round.

The stumbling block, though, is just how weak the Kiwi could still go.

I'm out of touch with the Kiwi economy. Are there any reasons why it's tumbling so much?

Hello Bendix,

the reserve bank of N.Z. has been trying to slow the economy by raising the interest rates.

They allways go to far and hold to long.As I write this the Kiwi dollar is free falling .

It has droped close to US 4 cents in the last few days. 6.5% this year.

Have just heard that against the AUS dollar, we are at close to the bottom historically.

If you want to put some of your money into a N.Z. bank you can definately get 7.4% but I am not sure how the tax will work for you. I have money invested here and pay 19.5% because I supplied my tax number.

I am no expert but I do know the cycles in N.Z.. Dont worry to much about the economy here as it bottoms out and then slowly takes a new breath.

I brought US dollars a couple of months ago at US 70.5cents ( now 63.30 ) and am expecting 15-20% return, getting close to 10% now.

The Japs are about to sell their Kiwi bonds as they the returns deminishing. We have had the highest interest rates they can get for quite some time but as the economy slows, the reserve bank will have to start dropping rates to stimulate the economy. Like mouth to mouth to a dying person.

If you want any info on what is happening here as far as interest rates go just PM me.

[bendix]

Thanks . . I'm not sure the Kiwi is at a low . . . I recall it being around 1.20 a few years ago, but it's certainly making me think seriously about taking a punt.

As for the tax issue . . . i live in Thailand and can opt to sign an approved issuer levy . that way, only 2% of gross interest gets shaved off, and no withholding tax. Of course, then it's up to you how you treat the tax thai issue . . . .

[steveromagnino]

Thanks . . I'm not sure the Kiwi is at a low . . . I recall it being around 1.20 a few years ago, but it's certainly making me think seriously about taking a punt.

As for the tax issue . . . i live in Thailand and can opt to sign an approved issuer levy . that way, only 2% of gross interest gets shaved off, and no withholding tax. Of course, then it's up to you how you treat the tax thai issue . . . .

5555555555555555

Indeed. I would say the Kiwi is weakening against almost everything at the moment, and the real question is whether the investment of the last few years has been making NZ more competitive, because from what I understand, all that money is either foreign money buying real estate, or locals buying real estate.

The businesses I know in NZ that are actually doing well are few are far between other than trademe.co.nz; then again FTAs may help, but that is mostly to prop up Fonterra more than anything else AFAIK; which is a disaster waiting to crumble according to the farmers I know who are stuck in their area, and according to my old company which supplies them. Other than Fonterra, most of the FTA is going to benefit the consumers in NZ with lower prices; but with the NZ dollar dropping, I'd say that the point of comparison is going to be tough. A fair chunk of housing being sold off to Americans etc at the moment but in a while the amount of land still available to do this is going to run out, and once the Asian immigrants start figuring out that there is almost no way to make money in NZ I can't see the economy staying where it was a few years ago.

So my pick is this recession could potentially be worse than the previous ones, as the property market starts to drop; as soon as rates drop NZers go crazy and pour more money into property, and as soon as rates go up the currency picks up and makes the exporters even more uncompetitive....

Mind you, I have a terrible track record; and for the NZ : Aust cross rate I guess a fair few of these factors are the same for the people in Australia, as their property market is perhaps even more overheated in some segments (e.g. inner city apartments) than NZs.

[Vegemite]

Thanks . . I'm not sure the Kiwi is at a low . . . I recall it being around 1.20 a few years ago, but it's certainly making me think seriously about taking a punt.

As for the tax issue . . . i live in Thailand and can opt to sign an approved issuer levy . that way, only 2% of gross interest gets shaved off, and no withholding tax. Of course, then it's up to you how you treat the tax thai issue . . . .

The Kiwi is definately not at a low yet. Not long ago it was buying US74c yesterday Us63.3c today Us64c.

Those that make a living out of being in the know about these things said the Kiwi dollar would drop 20%. Now it has dropped almost 10%. I am confidant that it will go to at least 15% and probably 20% against the US. I have put some money where my mouth is.

Not to many years ago the Kiwi was buying US45c. Exporters are happy at around US 50 - 55.

One thing that you should keep your eye on is that now the reserve bank of N.Z. have stopped tightening but say they will not drop interest rates this year ( economists say they will have to drop rates mid-year because the economy is heading south faster than they think. The bank works with historic figures that can be up to 6 months old, get stats for one quarter and analyse them for another quarter. ) When the trading banks get wind of falling rates they will stop offering such good rates for term deposits.

All the best.

[Vegemite]

5555555555555555

Indeed. I would say the Kiwi is weakening against almost everything at the moment, and the real question is whether the investment of the last few years has been making NZ more competitive, because from what I understand, all that money is either foreign money buying real estate, or locals buying real estate.

The businesses I know in NZ that are actually doing well are few are far between other than trademe.co.nz; then again FTAs may help, but that is mostly to prop up Fonterra more than anything else AFAIK; which is a disaster waiting to crumble according to the farmers I know who are stuck in their area, and according to my old company which supplies them. Other than Fonterra, most of the FTA is going to benefit the consumers in NZ with lower prices; but with the NZ dollar dropping, I'd say that the point of comparison is going to be tough. A fair chunk of housing being sold off to Americans etc at the moment but in a while the amount of land still available to do this is going to run out, and once the Asian immigrants start figuring out that there is almost no way to make money in NZ I can't see the economy staying where it was a few years ago.

So my pick is this recession could potentially be worse than the previous ones, as the property market starts to drop; as soon as rates drop NZers go crazy and pour more money into property, and as soon as rates go up the currency picks up and makes the exporters even more uncompetitive....

Mind you, I have a terrible track record; and for the NZ : Aust cross rate I guess a fair few of these factors are the same for the people in Australia, as their property market is perhaps even more overheated in some segments (e.g. inner city apartments) than NZs.

Trademe just got sold for N.Z.700 million. Immigration has propping up the housing market but is dropping. The N.Z. dollar has been held high recently because of the high interest rates available to offshore investors such as the Japanese using Urodashi bonds. Those bonds are coming due for renewal during Feb and March. With the N.Z. dollar dropping and the returns probably dropping there will be a wholesale sell off.

Nobody is talking of a recession yet and generally, things are still pretty healthy.

Some Asian immigrants are doing very well these days but it is still hard. Most of them bring money with them but many are doing well without it. They are good hard working people in general but Thais hardly show on the radar. Immigration has tightened up because of the number of overstayers. Now it is hard for a Thai to get a visa. Very sad.

The immigrant population in Auckland is now approaching 40%, there are all sorts of people here. Great fun.

P.S. dont get me wrong about the Thais. There are only 2 - 3000 in Auckland these days. Not official but you just dont see them every day like some of the other Asians.

All the best.

[steveromagnino]

Trademe just got sold for N.Z.700 million. Immigration has propping up the housing market but is dropping. The N.Z. dollar has been held high recently because of the high interest rates available to offshore investors such as the Japanese using Urodashi bonds. Those bonds are coming due for renewal during Feb and March. With the N.Z. dollar dropping and the returns probably dropping there will be a wholesale sell off.

Nobody is talking of a recession yet and generally, things are still pretty healthy.

Some Asian immigrants are doing very well these days but it is still hard. Most of them bring money with them but many are doing well without it. They are good hard working people in general but Thais hardly show on the radar. Immigration has tightened up because of the number of overstayers. Now it is hard for a Thai to get a visa. Very sad.

The immigrant population in Auckland is now approaching 40%, there are all sorts of people here. Great fun.

P.S. dont get me wrong about the Thais. There are only 2 - 3000 in Auckland these days. Not official but you just dont see them every day like some of the other Asians.

All the best.

Yep, I had heard that Trademe was sold off; and agree with your other comments...20% you reckon?! Well if we are 1/2 way there, then time to watch a bit more of a slump. Actually, briefly the NZ dropped to 39c vs. the USD; that was pre 9 11 if I recall correctly....

The info I get about the coming recession is from the supply industry (e.g. energy) where I used to work, and just general sentiment from the entreprenuers I know in NZ (the few remaining, the rest have gone to Australia). While some sectors of the economy will flourish (and I think the expat holiday housing in Taupo/Kiapara etc is one of them) some of the economy such as boat building has been slowly going off the boil for a while now, and maybe the dropping dollar will help them, but the damage has already been done, with boats and sails being made in China now; a one way street.

There are always the NZ success stories like my old boss Greg Muir going to Pumpkin Patch, but overall it is an economy hard to predict.

For Asian immigration, that is more my mum's feedback; she still lives there and mixes with a lot of the immigrants (mostly chinese some Thai) and almost none of the ones going there with lots of money have been that successful that she know of. On the other hand, the ones going there with not much tend to do well e.g. Thai restuaranteurs from the first batch of 10 years ago. I think the ones going with money expect to invest in the way they do in Asia, and invariably the mechanics of making money in NZ vary so much in NZ compared with how they did things back home. By comparison, the immigrants going with not much e.g. Cambodians and vietnamise, tend to buy into labour intensive cash generating business such as bakeries, and do probably better as a result than many of the better educated smarter immigrants who often are looking for something a bit more 'hi so' than a bakery!

If we are talking immigrants there yep, I'd say Thais are aruond 2-3000. But including students and temp working staff and (of course) illegals and it gets up around 10 times that I would guess. I heard that you can overstay now for 5 years then apply for citizenship; is this actually true?!

Anyway, back on topic, I see NZ slumping a bit once housing cools down; as so many people have their investment in property alone, and a drop in prices will be kicking them hard. However, if it drops 20% then the next wave of immigrants will be keen to go to NZ again; cheap housing and cheap money to boot.

20%......have to start thinking on what to do with our money in Aussie too then....

[Vegemite]

Trademe just got sold for N.Z.700 million. Immigration has propping up the housing market but is dropping. The N.Z. dollar has been held high recently because of the high interest rates available to offshore investors such as the Japanese using Urodashi bonds. Those bonds are coming due for renewal during Feb and March. With the N.Z. dollar dropping and the returns probably dropping there will be a wholesale sell off.

Nobody is talking of a recession yet and generally, things are still pretty healthy.

Some Asian immigrants are doing very well these days but it is still hard. Most of them bring money with them but many are doing well without it. They are good hard working people in general but Thais hardly show on the radar. Immigration has tightened up because of the number of overstayers. Now it is hard for a Thai to get a visa. Very sad.

The immigrant population in Auckland is now approaching 40%, there are all sorts of people here. Great fun.

P.S. dont get me wrong about the Thais. There are only 2 - 3000 in Auckland these days. Not official but you just dont see them every day like some of the other Asians.

All the best.

Yep, I had heard that Trademe was sold off; and agree with your other comments...20% you reckon?! Well if we are 1/2 way there, then time to watch a bit more of a slump. Actually, briefly the NZ dropped to 39c vs. the USD; that was pre 9 11 if I recall correctly....

The info I get about the coming recession is from the supply industry (e.g. energy) where I used to work, and just general sentiment from the entreprenuers I know in NZ (the few remaining, the rest have gone to Australia). While some sectors of the economy will flourish (and I think the expat holiday housing in Taupo/Kiapara etc is one of them) some of the economy such as boat building has been slowly going off the boil for a while now, and maybe the dropping dollar will help them, but the damage has already been done, with boats and sails being made in China now; a one way street.

There are always the NZ success stories like my old boss Greg Muir going to Pumpkin Patch, but overall it is an economy hard to predict.

For Asian immigration, that is more my mum's feedback; she still lives there and mixes with a lot of the immigrants (mostly chinese some Thai) and almost none of the ones going there with lots of money have been that successful that she know of. On the other hand, the ones going there with not much tend to do well e.g. Thai restuaranteurs from the first batch of 10 years ago. I think the ones going with money expect to invest in the way they do in Asia, and invariably the mechanics of making money in NZ vary so much in NZ compared with how they did things back home. By comparison, the immigrants going with not much e.g. Cambodians and vietnamise, tend to buy into labour intensive cash generating business such as bakeries, and do probably better as a result than many of the better educated smarter immigrants who often are looking for something a bit more 'hi so' than a bakery!

If we are talking immigrants there yep, I'd say Thais are aruond 2-3000. But including students and temp working staff and (of course) illegals and it gets up around 10 times that I would guess. I heard that you can overstay now for 5 years then apply for citizenship; is this actually true?!

Anyway, back on topic, I see NZ slumping a bit once housing cools down; as so many people have their investment in property alone, and a drop in prices will be kicking them hard. However, if it drops 20% then the next wave of immigrants will be keen to go to NZ again; cheap housing and cheap money to boot.

20%......have to start thinking on what to do with our money in Aussie too then....

I really doubt that any Thai can stay for 5 years and then get citizenship. The few that I know of, that have been caught overstaying have been on a plane out of here in 24 hours. One lady recently deported cant apply for a visa for 5 years even with the help of an expensive lawyer sent to Thailand. Mind you if her Kiwi husband had could easily have activated something before it ever got to the deportation stage. Not the brightest star in the sky.

You are right about the Kiwi addiction to property. I have been in or on the fringes of the building industry here for most of my life. During the last few years many people have been buying rental properties. The last time we got a bubble like we have now there were landlords trying to flick off thier rentals as there was an over supply and the interest rates were going up or the fixed terms were due for renewal or there was an over supply and the returns were not as good as expected.

Lots of houses on the market and prices going down.

My work has allways depended on " the economy " and I have watched it closely for to many years.

Almost all economists here were forcasting a 20% drop in the Kiwi against the US when the Kiwi was buying US 73. But economists are not allways right and they generaly still get paid if they are wrong. One that is worth listening to is Gareth Morgan at infometrix (google infometrix) and some reasonable info from Roger Kerr at rogeradvice .com

Not sure if any help for you but worth a look and Gareth Morgan is seldom wrong. Also he is the father of the man that just sold Trademe.com

Just instincts for me and I havent seen N.Z. bottoming out at this stage.

All the best.

[steveromagnino]

My work has allways depended on " the economy " and I have watched it closely for to many years.

Almost all economists here were forcasting a 20% drop in the Kiwi against the US when the Kiwi was buying US 73. But economists are not allways right and they generaly still get paid if they are wrong. One that is worth listening to is Gareth Morgan at infometrix (google infometrix) and some reasonable info from Roger Kerr at rogeradvice .com

Not sure if any help for you but worth a look and Gareth Morgan is seldom wrong. Also he is the father of the man that just sold Trademe.com

Just instincts for me and I havent seen N.Z. bottoming out at this stage.

All the best.

interesting stuff; yes, I know Gareth Morgan, we used him from time to time in my old company Enerco as a consultant regarding market movements.... I agree, his estimates are usually pretty sharp.

Thanks for your thoughts; I just don't get the NZ obsession with property.....

[bendix]

gareth morgan is the father of sam morgan, the young lad who set up trademe.co.nz and who is now a very wealthy young lad.

true story this . . i once hired sam as a junior designer when i worked for a Big 4 firm in NZ. great lad. he stayed a year or two, then set up trademe. A real kiwi success story and a genuinely nice guy. Very happy for him.

[chuchok]

Even many of the so called experts rate Gareth Morgan.BTW, he probably picked up NZ20mill with the sale of trade me.

As for the dollar, you can thank the NZ Government for intervening here.They TOLD the Japanese investors to stay away from investing...

They wanted to give exporters a kick start, but interest rates have started to climb and the balance of payments have turned to <deleted>.around and around we go....

[Vegemite]

Even many of the so called experts rate Gareth Morgan.BTW, he probably picked up NZ20mill with the sale of trade me.

As for the dollar, you can thank the NZ Government for intervening here.They TOLD the Japanese investors to stay away from investing...

They wanted to give exporters a kick start, but interest rates have started to climb and the balance of payments have turned to <deleted>.around and around we go....

Perfect. You got it in one.

Also the reserve bank only has to control inflation and is blind to everything else.

The only good thing in my eyes is that it is all so predictable but very sad in a lot of ways.

Around and around!

[Mighty Mouse]

Sydney Morning Herald (25-3-06) article on Aussie and Kiwi dollars.

http://www.smh.com.au/news/business/dollar...3083984209.html