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Looking At Trends Of Our Major Import Currencies

Let’s look at import currencies this week and the three major import currencies are the US dollar, the Australian dollar and the New Zealand dollar or the bird/Kiwi. As importers
10 Sep 2016 08:47
Looking At Trends Of Our Major Import Currencies

Let’s look at import currencies this week and the three major import currencies are the US dollar, the Australian dollar and the New Zealand dollar or the bird/Kiwi.

As importers are well aware that the Australian Dollar and the Kiwi have been strengthening against the Fijian Dollar, for the US Dollar against the Fijian Dollar, it is starting to weaken and was evident this week.

The Kiwi is doing well due to a robust economy.  Their commodity exports over the course of 2016 have seen a strong growth over the course of 2016.

Dairy and meat which are the supremacy exports of New Zealand have flat lined and are being challenged by the growth in exports of kiwifruit, apples and wine.

These products have risen by over 10.0 per cent in year to June supporting the economy and the currency.

Furthermore, the New Zealand business confidence for the month of August showed an impressive 15.5 per cent surge.

Also their high interest rate of 2.0 per cent continues to gain support from investors who seek high yields for their returns.

Bank of New Zealand analysts have now upgraded their forecasts for the bird saying that we can expect a “stronger-for-longer” profile.

 

AUD strengthening

Meanwhile, the Australian dollar’s strength has being boosted by the house price growth in China released on Monday this week.

Since May, the house price growth has been slowing but a re-acceleration of prices across all tiers was recorded in the month of August by the China Real Estate Index System.

You may be wondering how this affects the Australian dollar; Chinese house price growth has been a good lead indicator for the mining sector and this would explain why the mining-intensive Aussie dollar has caught a lift.

To add to the lift in Aussie dollar was the disappointing US jobs data (Nonfarm Payroll for the month of August) reported on September 2, the Reuters poll expected it to be at 180,000 but it fell further to 151,000.

 

What’s causing USD to slip

Looking at the US dollar, the disappointing result from the US jobs data for the month of August weakened their currency.

But the most important factors that have been causing the US currency to slip are oil and bets that the Federal Reserve will not hike rates this month.

Supply glut in oil is due to Iran not willing to cap production because they want to regain its share of the global petroleum market after the removal of Western sanctions following Iran’s nuclear deal with world powers.

It has said it will participate in talks on a possible production freeze after it reaches an output of 4 million barrels per day by April 2017.

OPEC member countries wants the oil price level to be at US$50-$60 (FJ$102-FJ$122) a barrel but currently it is at:

  • Brent crude futures for November delivery was at US$47.40 (FJ$97) a barrel and
  • US crude for October delivery was at US$45.17 (FJ$92) a barrel.

The oversupply of oil in the market is dropping the oil prices weighed on energy stocks and is directly affecting the US dollar by weakening its currency.

But a drop in oil prices means a strong Aussie dollar and kiwi.

Given below are the three major import currencies for Fiji and how it has been trading for the month of August.
This is an informative publication, sponsored by The Fiji Sun, Fiji Bureau of Statistics and HFC Bank. All views expressed or implied are purely of the Treasurer at the HFC Bank, Peter Fuata.



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