Opinion: Kiwi to trade in narrow range in early 2009

By Roger J Kerr The NZD/USD exchange rate has stabilised and settled in the 0.5400 to 0.5500 region as we anticipated would happen in December. The sellers are still waiting around for any short-term strength in the Kiwi to sell into, as was evident with the weaker USD last week failing to really push the Kiwi higher. I would not expect that EUR to strengthen above $1.3500 against the USD, therefore would not expect the Kiwi to trade above 0.5700 through the Xmas holiday period. I do not expect upcoming economic data releases (business confidence, DEFU, GDP and Current A/c) to influence the NZD too much over coming weeks. The NZD has experienced a volatile and tumultuous year, the 30 cent drop from 0.8000 to 0.5000 being unprecedented in terms of speed and distance. However, that is all behind the market now. From here there will be considerably less international investor and speculative interest in the Kiwi dollar and thus narrower trading ranges have to be expected in the first half of 2009.  "”"”"”"”"” *Roger J Kerr runs Asia Pacific Risk Management. He specialises in fixed interest securities and is a commentator on economics and markets. More commentary and useful information on fixed interest investing can be found at rogeradvice.com.