We use the exchange rate. When we say “RBNZ”, what we are talking about is the Reserve Bank of New Zealand. The RBNZ is not as powerful or important to the economy as it used to be. We are looking for what would happen if one day it does something that affects the NZD/USD exchange rate, so this article will help you decide whether you should sell your NZD or buy more NZD right now.
The RBNZ has historically had a reputation of being conservative and pausing between moves to gauge their effects on the currency movement and economy before making another decision. With this in mind, they often take time to react quickly when necessary due to their deliberation process. We are going to follow the way that the RBNZ did things in the recent past, and look back at their decision-making process to see what might have happened if they had reacted differently.
When will the RBNZ decide to move the NZD/USD rate?
RBNZs have in the recent past moved when they believe it is most appropriate to do so. This has changed recently, as they have moved more often, and this is likely due to a change in their culture. The RBNZ used to move based on either a set time period or a specific event, but this is no longer true. Now there are various things that may lead them to make an adjustment at any time or change the timing of an adjustment. Of the most important of these things we can probably highlight the following:
* Economic growth in New Zealand and overseas.
* Changes in inflation rates.
* Changes in interest rates set by other central banks.
* Economic growth projections for New Zealand based on survey data.
* Economic growth projections for specific industries or regions in New Zealand based on survey data.
* Economic impacts of political decisions made by the government, or changes to government spending.
* Major events that have a direct impact on the financial market such as new regulations, tax changes, or international agreements.
* Supply and demand issues that have an influence on commodity prices and exchange rates.
* Geopolitical events that directly affect the NZ economy.
What would happen if the RBNZ did nothing?
If the RBNZ did nothing, it is likely that by doing nothing they would confirm to everyone that they have no intention of moving in the short term. By this inaction they are showing that they are confident enough in their previous rate decisions and/or their current economic outlook to not feel a need to change anything currently happening in order to avoid devaluing the New Zealand dollar, or conversely, to increase its value. This inaction can be seen as either a positive or a negative for those who hold New Zealand dollars at any given time.
If the RBNZ does nothing and maintains their current outlook for the economy and their previous rate decisions, then it is likely that one day this will end, and either a hike or a cut will occur. This could be in an amount as large as $2 or up to $200.
If the RBNZ were to change something at any time (as they always have), they would do so within a few weeks of when changes were put into place. This is because they want to ensure no differences between what they were doing beforehand and what they are doing now exist in order to avoid surprises.
What would happen if the RBNZ did something?
If the RBNZ were to change something at any time (as they always have), they would do so within a few weeks of when changes were put into place. This is because they want to ensure no differences between what they were doing beforehand and what they are doing now exist in order to avoid surprises. In order to avoid any inflationary worries, there could be some other reason behind their decision, and this could be in one of a number of areas:
1. If the RBNZ were to cut, it is likely that they would cut by a greater amount than they had planned to (due to market forces) and this could result in cuts smaller or larger than they first planned.
2. If the RBNZ were to hike, it is likely that they would hike by more than what was originally planned for (due to market forces).
3. If there is a lot of volatility in currency markets as a result of an increase/decrease, then that could also cause an increase/decrease in value for the NZD/USD exchange rate.
