Sterling to New Zealand Dollar?
Discussion
Is anyone moving to a different currency to preserve the value of their money or is sterling expected to remain strong? Surely once the talk of higher interest rates is quelled with talk of needing some money printing, sterling will come down a bit.
My bank offers a fixed term 1 month deposit account paying out 1.78% in New Zealand Dollars (they also do a thai baht 6.31% lol). Wondering whether I should move some cash into new zealand dollars and get some interest plus currency appreciation.
My bank offers a fixed term 1 month deposit account paying out 1.78% in New Zealand Dollars (they also do a thai baht 6.31% lol). Wondering whether I should move some cash into new zealand dollars and get some interest plus currency appreciation.
You guys are missing one huge factor. The odds are the ccy will be worth LESS when you convert it back to gbp in the future. You can take all the advice you like but no one knows where the cry is going. It's a gamble. Arbitragers will close the gap
Edited by Burwood on Saturday 29th August 18:44
Hi Richyboy,
Burwood is correct - whilst the current rate of interest is greater in New Zealand (and Thailand), moving your money into the foreign currency would leave you exposed to currency fluctuations.
I work in FX and this questions is asked quite a lot. By putting your money into NZD, you would need to hope that the dollar does not depreciate against the pound by more than the rate of interest that you are achieving. With current market conditions, this is a BIG gamble - most forecasts suggest that the NZD could continue to weaken as the fall out from China puts pressure on the New Zealand economy.
Also, you can not hedge against this devaluation. Hedging would allow you to guarantee your rate when you bring your NZD back to the UK. However, the markets are not silly - the forward hedging price will already have the interest rate differential build in, so you would lose any interest that you have gained by keeping your money in NZD.
Sorry about that - good thinking, but unfortunately making money is not that simple...
(Let me know if the above doesn't make sense - I can run through an example if you like).
Chris Canning.
Burwood is correct - whilst the current rate of interest is greater in New Zealand (and Thailand), moving your money into the foreign currency would leave you exposed to currency fluctuations.
I work in FX and this questions is asked quite a lot. By putting your money into NZD, you would need to hope that the dollar does not depreciate against the pound by more than the rate of interest that you are achieving. With current market conditions, this is a BIG gamble - most forecasts suggest that the NZD could continue to weaken as the fall out from China puts pressure on the New Zealand economy.
Also, you can not hedge against this devaluation. Hedging would allow you to guarantee your rate when you bring your NZD back to the UK. However, the markets are not silly - the forward hedging price will already have the interest rate differential build in, so you would lose any interest that you have gained by keeping your money in NZD.
Sorry about that - good thinking, but unfortunately making money is not that simple...
(Let me know if the above doesn't make sense - I can run through an example if you like).
Chris Canning.
Edited by ChrisCanning_Argentex on Wednesday 2nd September 12:01
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