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  1. #11
    Join Date
    Dec 2004
    Location
    Wales, UK
    Posts
    127

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    have to disagree CJ one of the key movements in strength of the NZ dollar against the US has been the interest rate differential, when huge banks who trade millions in Forex each day they need a palce to park there cash and a higher int rate currency is more attractive

  2. #12
    Join Date
    Oct 2003
    Posts
    3,578

    Default

    That is the economic theory though but I must admit there is a hole in my knowledge that makes me agree with you. Our high interest rate makes our currency more attactive so people buy.

    Maybe it is based on old world economics (my own term). In the old days, if russia was offering 25% interest, you wouldn't be attacted by the high interest rate as you would expect the russian currency to depreciate by 25%.

    Just put it out there as a warning to watch out for a drop in currency. teh Big Mac index however says that NZ is priced about right. Anyone have the latest big mac index (from economist i think). A can of coca cola would be another interesting comparison.


 

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