Tips on Forex Trading in New Zealand

New Zealand is an industrialized country and is fast growing into an international competitive market economy. Its Gross Domestic Product (GDP) has grown from US$97.39 billion in 2005 to US$119.549 billion in 2010. This rapid growth has boosted income and led to technological advancements. This can be seen from the fact that the nation’s per capita income stood at US$31,067 in 2010.

New Zealand is a country rich in agricultural resources and a majority of its income comes from trading such resources. In fact, the agriculture sector accounts for 20% of its GDP. New Zealand’s major trading partners are Australia, China, Japan and the USA.

Forex Trading in New Zealand: An Overview

The Reserve Bank of New Zealand (RBNZ) is the country's central bank. Its policies are driven to maintain the stability of the financial system and to satisfy the currency needs of the public, while maintaining inflation between 1 to 3 percent. The RBNZ also functions as the Forex Regulatory Authority of New Zealand.

Factors Affecting Forex Trading in New Zealand

Here are some things to keep in mind while trading in New Zealand
1) The country has a very small population and therefore even a slight increase in migration has severe effects on the economy.
2) Its GDP relies heavily on the export of agricultural produce. However, the island nation is also affected by severe weather conditions. For example, the recent droughts have heavily injured its economy.
3) New Zealand’s economic stability is directly connected to the economic conditions in Australia. Therefore, if the markets drop in Australia, a fall in New Zealand is expected as well.
4) New Zealand Dollar (NZD) is a commodity linked currency. Thus, an increase in commodity prices results in the appreciation of the NZD.
5) Much like the Australian dollar, the NZD enjoys the status of a carry trade amongst forex traders. This is due to the high interest rates prevalent in New Zealand.