Kiwi Dollar down after radio interview by central bank governor

08-31-2009 14:12

The Kiwi Dollar fell against the US Dollar and the Japanese Yen as a result of decreasing demand for higher-return investments while investors evade risky trading options such as New Zealand assets. The governor of the Reserve Bank of New Zealand, New Zealand’s central bank, fears the strength of the Kiwi.

Radio interview central bank governor

Allan Bollard, governor of the New Zealand central bank, said in a radio interview that a strong New Zealand Dollar has a negative impact on the country’s exports. The Kiwi dropped against the majority of the 16 most popular currencies, which was also caused by declining equity markets in Asia, especially the Chinese stock market, as the Shanghai Composite Index fell over 6%, making the comparatively riskier assets in Australia and New Zealand less interesting.

Kiwi Dollar down

Economists believe that the economy of the South Pacific nation will benefit from a decrease in the New Zealand Dollar rates. The revival of the New Zealand economy could be hampered due to the optimistic patterns of the Kiwi during the previous two months, as a strong currency has a negative influence on exports. However, it will not be easy to forecast the Kiwi performance if fluctuations remain strong, as it also will be difficult to estimate the development of the nation’s economy in general, taking the export-status into consideration.