Strong Kiwi is last thing New Zealand economy needs

New Zealand Dollar has been one of the top performer since US Federal Reserve chose not to hike rates in September meeting which followed by weaker than expected non-farm payroll report. Kiwi appreciated more than 650 pips within a month, riding on the optimism of rebound in softer commodities and milk prices.

Latest commitment of traders report shows that speculators have increased their long bets in New Zealand Dollar, with overall positioning in positive territory for second week in a row.

However, strong Kiwi is the last thing New Zealand economy needs. September trade balance report suggests further support from weaker exchange is required along with easier monetary policy.

• Trade deficit came at more than 1 billion Dollar for second month in a row. For September, trade deficit came at 1.22 billion Dollar lowest since September last year. New Zealand economy is now running trade deficit for fourth consecutive month.
• Latest report shows, not only the value of total Milk exports dropped, volume has also declined.

Even if Reserve Bank of New Zealand is worried on the effects of loose monetary policies over its housing market it should come up with verbal intervention to keep the kiwi down.

Kiwi is currently trading at 0.678 against Dollar.