NZD vs AUD

April 26th, 2013 at 3:00 pm by David Farrar

Tony Alexander from BNZ writes:

Against the Australian currency the NZD has risen firmly in recent weeks and now sits at its highest level since October 2009. This movement upward from 80 cents a month ago is based upon a number of things. …

Third, the fiscal track in NZ is surprising on the positive side with revenue inflows running ahead of expectations this year. In contrast in the Treasurer Wayne Swan has had to make a very embarrassing climb-down from his position that fiscal surplus would be achieved in 2013/14 no matter what. Now he speaks in terms of a surplus not appearing for many years. Commentators are noting that a Federal Labour government in has not produced a surplus since 1989, there is growing criticism of the never-ending spending promises being made, and this week Standard and Poors warned that they could cut ’s rating in five years’ time.

That is a fascinating statistic. No surplus since 1989.

Fourth, Australia’s currency is more strongly assessed as being tied to growth prospects in China than the NZD.

Fifth, as China grows the expectation is that NZ will benefit more than Australia from here on out because of strong food demand compared with past strong demand for coal and iron ore.

Hopefully the demand will hold up. As unemployment in Spain hits 27%, Europe is going to remain a basket case for some time.

 

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9 Responses to “NZD vs AUD”

  1. RightNow (6,348 comments) says:

    And they scoffed at Key saying we could ‘close the wage gap’ with Australia. All it takes is a Labor government – there.

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  2. KiwiGreg (3,129 comments) says:

    Sadly for the Aussies they have spent their mineral royalties locking in spending “entitlements”. When the gloss comes off they will have an even worse fiscal situation.

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  3. sbk (299 comments) says:

    Boom and Bust socialist style…a mining boom…eliciting a boom in bribes…resulting in a bust,as Labor misdeals…a Leftist Texas Hold em…the punter always end with the losing hand…even if you have a winning hand(a mining boom).

    ..billions gone and nothing concrete to show for it…oh wait…a decade of deficit still to come.

    if it were a company…

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  4. OTGO (457 comments) says:

    You are absolutely correct RightNow. Every time the NZD firms against the AUD the gap closes.

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  5. F E Smith (3,275 comments) says:

    That is a fascinating statistic. No surplus since 1989.

    What is more interesting is that their combined deficit for the last 5 years (i.e. Rudd & Gillard governments) is heading for $200 billion all up.

    They went from a situation where there was no Government debt and a surplus in the Government accounts to $200 billion behind, all without actually going into recession!

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  6. Ross12 (930 comments) says:

    To put the Aussie situation into more perspective BHP (ie. one company!! ) paid more in taxes and royalties than the Australian Govt spent on education.

    http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/taxing_miners_to_pay_for_a_gold_headstone_for_car_makers/

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  7. Viking2 (10,734 comments) says:

    One of Australia’s most respected economists, Ross Garnaut, of the University of Melbourne, warns that when the mining boom busts, the economy is likely to bust with it. History is on his side. Since 2005, mining investment has reared up like a tidal wave, from 2 per cent of GDP to more than 8 per cent. If it breaks like a tidal wave, it will swamp the economy.

    Read more: http://www.smh.com.au/opinion/politics/farewell-to-good-times-somethings-gotta-give-20130422-2iad7.html#ixzz2RSVCATDP

    Yes with conseqences for NZ and note that he says when not if. 2014/15 which I’m sure that Key and Co are actuely aware of.
    Worth a read.

    So perhaps the Aussie banks know something as well.

    Getting cashed up now.
    Australasia’s big 4 banks expected to post combined 5% rise in half-year cash earnings to A$13.22 billion

    Australasia’s big four banks are expected to record a combined A$650 million, or 5%, rise in half-year profit to A$13.22 billion (about NZ$16 billion).

    http://www.interest.co.nz/bonds/64134/australasias-big-4-banks-expected-post-combined-5-rise-half-year-cash-earnings-a1322-bil

    ”The high dollar is weighing on prices,” said Treasurer Wayne Swan. ”And the flipside … is that this is putting immense pressure on the profitability of many businesses.” He said Australia was probably in the grip of deflation.

    ”Price growth for domestic goods and services, which is a broader group of prices than the consumer price index, has generally been much weaker than the CPI we are seeing today. Quarterly growth in the prices for all goods and services in our economy as measured by the GDP deflator has been negative in four of the past five quarters.

    Read more: http://www.smh.com.au/opinion/political-news/inflation-fall-rings-treasury-alarm-20130424-2if13.html#ixzz2RSX7skhF

    So not looking good and I am meeting people returning home because they cannot get a pension there.

    Have seen a least three reports of mines being shut this week. Gold Nickel and coal.

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  8. tvb (3,945 comments) says:

    The Federal Government of Australia has produced a surplus but under the Coalition. It is Labour that Cannot produce a surplus because Julia Gillard keeps announcing policies that cost money most recently their education policy. 1989 refers to no labour Government since then has produced a surplus.

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  9. Floyd60 (59 comments) says:

    Key and English campaigned on their ability to manage a high dolllar in 2008. A lot of the media supported them. Obviously they were from the Davis Gower school of media ethics.

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