New Zealand Dollar / Swiss Franc - NZD/CHF

If the Swiss Franc (CHF) is fairly considered as a defensive security by investors, as it often appreciated against the other world currencies in period of stagnation, even economic crisis or decrease of the share markets, the external value of the New Zealand dollar (NZD, “Kiwi”) is more “classically” linked to the level of the raw material world exchange rates (which represent 40% of the whole New Zealand exports) and to the economic health of its main trade partners: Australia, Japan and the South East Asian countries.

The high key interest rates policy run by the New Zealand central bank has an influence on the external value of the Kiwi; carry trade operations (buying of a currency with high interest rates in a currency with lower interest rates) had for a long time maintained a “strong” New Zealand dollar (the New Zealand rates reached 8.25% in 2007-2008 after the continuous and repeated increases since 1999).

Since 2004, the fluctuations of the NZD/CHF have clearly followed the structural evolution of the Kiwi’s external value, as a similarity of trends and reversal times of these trends has been observed between the Kiwi’s fluctuations and the NZD/CHF ones for example.

Being bullish and in the sense of an appreciation of the New Zealand dollar from then end of 2004 (NZD/CHF = 0,80) to the end of 2005 (NZD/JPY = 0,92), the exchange value of the NZD/CHF cross decreased a little during the first quarter of 2006 (NZD/CHF= 0.76 in June 2006) before being clearly bullish to reach the higher NZD/CHF= 0.94 in June 2007.

The farm raw material exchange rates had then increased a lot, but this movement stopped and inverted from the first quarter of 2008; so the NZD/C HF exchange rate constantly decreased until March 2009 at NZD/CHF= 0.58: the New Zealand dollar lost nearly 40% of its value against the Swiss Franc in half and a year.

A re-appreciation of the Kiwi happened with the help of its great re-appreciation against the American dollar (NZD/CHF= 0.7453 at the beginning of November 2009).