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New Zealand Dollar Drops On Report Housing Market Will Slow

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Just searched on XE.com and the NZ dollar is the strongest I have seen it since moving here in Oct. 1 pound now buys you 2.59 dollars compared to 2.81 8 months ago. This is the first time I have seen it stronger than 2.6. Not reall sure what that article is on about. I'm thinking about transferring my dollars back to pounds now because the dollar is so strong but my current account is paying 8% interest so it's much for much I guess.

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It's crazy, really. My understanding is that NZ has one of the most cyclical housing markets in the world and has worse affordability than even the UK - a big fall is on the cards there.

Inflation is still roaring away in NZ, so the central bank don't have any scope to lower rates. I can't see a way out except to induce a house price crash followed by a recession. Then interest rates can be lowered, the carry trade can unwind, the NZ dollar can depreciate and the whole cycle can start again.

Sounds eerily like the UK!

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