May 5, 2009

What's up with the NZ dollar?

How the heck does foreign currency work in a recession?

Look at the NZ dollar vs the US dollar in the last few days. I see no change to what its usually like before the recession: NZ$1 = US$0.577280 (May 5, 2009)

It could be worse I guess. I'm thinking that since the US market is so big, it can recover from a large fall very quickly. As the NZ market is tiny in comparison, the US dollar has a magnetic effect, affecting the overall threshold between the countries - even if NZ's economy weakens.

Would I be right?

The effect of the recession (from a naive casual observer's point of view), looks like it's hammering most major countries, but not crippling it. Perhaps this is because of the sheer volume of people finding alternative ways to generate income... by the way, did you know the internet is 40 years old?

Australia is of interest in all this, as only now it's approaching two consecutive quarters of negative growth, it's taken a while to be "officially" in recession. Australia really has kept itself buoyant so far, and the grip of recession may not be as severe as other big players in the long term. I suppose it's a good time for Kiwi's to live in Australia. The 2009 Australian Budget is revealed next week. We will watch (and learn) with interest, the true shape of the Australian Economy, coz in New Zealand, it's stuffed right now.

Meanwhile, folk are enjoying themselves in luxurious swimming pools on skyscraper roofs in wealthy Dubai, living it up.

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