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 Reports and Commentary from the Investment World

Reports and commentaries are posted here on a regular basis.


Cash. New Zealand Dollar.


The New Dealand Dollar.

Deposit based investors that followed our recommendation earlier this year to buy the New Zealand dollar, are laughing all the way to the Bank.

The New Zealand dollar has soared against the US dollar this last quarter. It has made gains of 8% against the US dollar in the last 3 months.

Currencies such as the New Zealand dollar and Turkish Lira are rebounding as global investors resume the so-called carry trade, a strategy of borrowing cheaply in countries such as Japan (with interest rates of 0.24%) and investing in countries with higher returns.

Investors are stepping up borrowing in Japan as evidence mounts that the Bank of Japan will keep borrowing costs low. Bank of Japan Governor, Toshihiko Fukui said on August the 4th, that he will keep increases in rates ``gradual.''  Government reports this month showed Japan's gross domestic product and consumer prices are rising less than economists forecast, reducing the need for higher rates.

The New Zealand dollar and Turkish lira were the biggest beneficiaries last month. New Zealand's benchmark interest rate is 7 percentage points above the Bank of Japan's and Turkey's is 17.25 percentage points higher.

Buy the New Zealand Dollar and enjoy an interest payment of 7.25%. You may also enjoy some further currency appreciation against the US Dollar, Australian Dollar, Euro and to a lesser extent, Sterling.


Disclaimer: All the information above is provided as a service for individuals and institutions. It should in no way be construed as a recommendation as an investment. Investment decisions should be based on the risk tolerance and planning horizon of the investor. Market participants must understand that past performance is also not a guarantee or predictor of future results.