Thursday, Mar 15, 2007
The Dark Side of the Carry Trade: Part 2
Turkish Weekly: US Dollar Hit By Another Meltdown in the Dow
US Dollar Hit By Another Meltdown in the Dow • Japanese Yen Soars as Carry Trade Liquidation Resumes • New Zealand Dollar Sees Majors Losses Against the US Dollar and Yen
Whoopsie! Another day another dollar - in this case the NZD gets slammed as folks unwind their carry trades. Much like Iceland's Krona, New Zealand's Dollar was an attractive target for the back-end of the carry trade - investors borrow cheap, nasty currency and invest it in higher yielding currencies (South African Rand(ZAR), New Zealand(NZD) and Iceland (ISK)). Now the music has stopped and rates start racing upwards, it is a dash for the exits.
What do you think the Govt of NZ may have to do......In defence of currency?
Posted by lvmreader @ 08:16 PM (171 views) Add Comment
3 Comments
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1. Workingholiday said...
Whoohoo! The NZ Govt knows the NZD is overvalued.
Most people in NZ are actually wanting it to fall as it's been killing exporters.
2. Semi-detached From Reality said...
I live in NZ, just read local paper - Friday noon - and they keep telling us how fortunate we are to have such a strong economy. "New Zealand is doing well, house prices up again!" Pity about the lamb prices though.
The reserve bank governor, Alan Bollard, had a public spat with the government last week. He has wanted to drastically increase interest rates for some time now. He can see where it's all going and who gets to be scapegoat.
More entertaining than Coronation Street.
3. tyrellcorporation said...
This is great news for me. My missus has dual nationality with NZ/UK and if the house market implodes over there, I'm outa here! Imagine if the NZD went back up to around 3.5NZD to the pound (as it was back in the 90's) - I could live like a KING!