Here’s an interesting question: What is causing the US Dollar to fall in value?

Now when I say ‘fall’ I mean from a New Zealand exchange perspective, however it’s also true the US dollar has weakened against a number of currencies.

To propose the US dollar is weakening globally, would be incorrect.

I can think of a number of currencies the US dollar has risen against:

Korean, Iraqi, Afghani……

In any case, looking back 20 years, th US Dollar has weakened significally against the NZ Dollar on two occasions. 1992, and 2001.

Now we all know why the US currency weakened in 2001, but why in 1992?

Perhaps it was the election of Bill Clinton in November, or the Re-election in Britain of John Major in April?

Who knows?

In any case, at both times the US dollar fell by roughly 25% almost instantly, and remained so roughly for four years. (1992 - 1996), (2001-2005).

Both times the market re-corrected sharply.

Currently we are sitting on a US/NZD dollar exchange of the highest in 20 years.

However since the Septmber 2005 (end of the second four-year cycle) strengthen of the US dollar against New Zealand Dollar, we’ve recenltly seen evidence of yet another weakening stage.

QUESTION:

Could the NZD get Higher against the USD?

My guess is yes.

Certainly in the short term (0-3 months), and almost probably in the mid term (3- 12 months)

Currently it’s Sunday 10.38PM 23/12/2007 , and the NZD/USD rate is .763. So I’m going to put my money where my mouth is and sell off the NZD.

ARTICLE UPDATE 29/12/2007 CLICK HERE TO VIEW