Currency fundamentals 'still strong'
Two analysts from SLJ Macro Partners in Britain wrote in a note to clients that while the case for the kiwi seems compelling, the reality is quite different.
"New Zealand has severe structural weaknesses that are very similar to those of crisis-hit southern European and southern emerging-market economies. Kiwi may be 20 per cent overvalued," they wrote.
They said they were not convinced about the good news stories being painted of the dollar. "The economy has high growth, high terms of trade, and the currency is high-yielding. However, the case for kiwi is, in our view, much less persuasive."
NZIER economist Shamubeel Eaqub said there was a bit of scaremongering going on. He said he still felt the New Zealand dollar was well supported in the short term, with rising interest rates, good commodity prices and economic growth.
Click the button below to subscribe and will have free unlimited access for a limited time to full article and all other articles on the site.
You will also be able to comment on articles on Good Returns.
