New-Zealand Dollar / Canadian Dollar - NZD/CAD

On the Forex, the fluctuations of the NZD/CAD cross depend on the structural data that affect the external value of both currencies, in particular at the level of the raw farm material for the “Kiwi” (NZD) and of the raw energy material (oil in particular for the Canadian dollar): raw far material and oil are important parts of the GDP  of New Zealand and Canada.

In the context of a general increase of the raw material rates, as observed from 2002 to 2007, these two structural criterions canceled, and other elements had a role such as the high key interest rate policy run by the New Zealand central bank (which made the NZD increase).

The New Zealand dollar is strongly linked to the Australian dollar, similarities between the fluctuations of the NZD/CAD cross and the fluctuations of the AUD/CAD cross were observed on the Forex.

With the exchange value NZD/CAD = 0,875 in January 2005 then NZD/CAD = 0,90 in April 2005, the cross decreased by 25% in a year until the exchange value NZD/CAD = 0,675 in June 2006; then it increased again until the value NZD/CAD = 0,83 in March 2007.

An important and fast decrease happened (like on the AUD/CAD cross) until the value NZD/CAD = 0,725 reached during the Spring 2007, then the Kiwi gained ground until NZD/CAD = 0,81 in March 2008.

Then, the New Zealand dollar depreciated against the Canadian dollar (as against the US Dollar, against the Euro and the other great currencies) in 2008 until a lower of NZD/CAD = 0,64 reached in February 2009.

Then the Kiwi fast re-appreciated in 2009, winning almost 20% against the Canadian dollar in few months, an exchange value superior to NZD/CAD = 0,77 was reached during the Fall 2009.

Here the theoretical equation NZD/CAD = NZD/USD (increasing by 50% in 2009) x USD/CAD (decreasing by 20% on the same period) seems to be true.

Considering the links between the Canadian dollar and the US dollar and the primacy in terms of volumes of the transaction made on the NZD/USD cross, it could be interesting to take the US dollar into account when analyzing the fluctuations of the NZD/CAD cross.

The cross had the exchange value NZD/CAD = 0,7534 by mid-January 2010.