28 September 2014
What was likely the biggest news of the week, Graeme Wheeler, the Governor of the Reserve Bank of New Zealand (RBNZ), said that the NZ dollar was "unjustified and unsustainable" and "susceptible to a significant downward adjustment" from its current level. The strength of the statement, and outside the normal schedule of releases, led to a dramatic movement lower in the NZD – down 3.3% against the US dollar over the week and down 1.5% against the AUD. The key rationale for their call for the NZD to fall was the recent collapse in dairy prices which are now off 45% from their highs in February this year. To push the point further from his statements, it sounds very likely the RBNZ has also been selling the currency themselves. Helping the fall this week has been general strength in the USD reversing many years of weakness. This movement turned many investors’ minds to stocks that could benefit from the fall in the NZD against the USD including Fisher & Paykel (FPH), Diligent (DIL), A2 Milk (ATM) and Fonterra (FSF) as examples.