Well its not looking to flash out there at the moment in terms of the financial markets.
Just look at these graphs of the New Zealand Dollar against the American Dollar.
This is the last three weeks
This is the last 12 months
This trend is since 1990.
Well this is obviously great news for exporters that the dollar is dropping. What I am amazed about is the speed at which it is dropping. Over the last 18 years just visually looking it is the fastest drop yet. But on the other side the increases were very quick as well.
With whats happening in the global economy banks are starting to tighten their lending criteria. Most banks you go to now require a 20% deposit before they will even look at a loan aplication. For first time buyers this means that it is getting hard out there compared to the last few years. But you must admit the last few years people buying property have had a fairly sweet ride.
What do you think is going to happen next and do you think this drop in our dollar is going to effect the real estate market?
6 thoughts on “New Zealand Dollar Falling Sharply Against the US Dollar”
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Hi Deon, this US dollar strength fascinates me. From what I’ve read lately it seems the US is essentially bankrupt. They owe so much more than they can ever hope to repay. They will have to print money and they’re probably already doing it. Would you invest money with a bankrupt? Google hyperinflation. You’ll discover what happens to countries that get backed into a corner so much that they print lots of cash.
Perhaps the US dollar is rising so rapidly because cash is flying back into the country from all corners of the earth? With so little cash in the US system, this would make sense. A pre-cursor of hyperinflation is a scarcity of cash. Then when things get real bad, any cash has very little value anyway.
I might be wrong, and I’m no economist, just a real estate agent, so I hope I am wrong. However, if we see a sudden and dramatic fall in the value of the US dollar soon, my theory above could play out I reckon. As things get worse I also wonder whether China is comfotable to keep huge foreign reserves denominated in US dollars? What if they all of a sudden decided to bail out of the US? Food for thought. Where would you have your money?
I aint no economist either and have never been in any sort of times when things are tough globally but I do feel that the entire world economy is on very thin ice – especially in america.
For instance sake there is only a few billion dollars short of 10 trillion US Dollars of property debt in the US right now. This is staggering – honestly where does this money come from….
Steve if China decides to pull their foreign reserves it might be the eruption to the eruption.
I dont know how the Bailout is affecting the dollar eigther, maybe its a false sense of security or a real security for the USD.
The problems arent just here and the US. Iceland has filed for bankuptcy and has had Russia Bail them out. A whole nation going Bankrupt. To me it looks as though the storm is in the northern hemisphere and us down these ways are only getting the wind gusts. But the NZ Dollar does puzzle me on how rapidly its dropping.
I worry at the moment about the dollar dropping. I am a car dealer and its now costing me 15% more to buy and import cars. This means that cars that are imported are going to have to increase in price. Also the money that we owe in the cars is increasing. There will be some people really hurting out there, which will make it harder for everyone.
Im an importer too, and im really worried. I was ment to finalise a US$20,00 order a couple of weeks ago, but I had a death in the family and was unable to do so. Now im ready to place my order and its (the NZ$) has droped even further.
Guys It must not be good. Exporters will most likely be having a a reprieve with the lower dollar.
Will most likely see imported cars increase in price now.
I’ve been absent for a while. If you want a good idea about what’s likely to happen in the USA have a look at these two videos:
http://www.youtube.com/watch?v=TP_aJ7LcAAA
http://www.youtube.com/watch?v=coaI3d89kuA
If these get you hooked, have a look at some of Peter Schiff’s earlier interviews in 2006 and 2007. He accurately predicted the current financial meltdown and nobody wanted to listen. Funnily enough, they still don’t want to listen!