EURNZD is moving in an Ascending channel and the market has reached the higher low area of the channel.
According to the opinions of several analysts, New Zealand’s economic expansion probably slowed down during the fourth quarter of 2022 as a result of tepid retail consumption as well as weaker demand in the manufacturing and construction industries. Even though it has already added 400 basis points since October 2021, the Reserve Bank raised the official cash rate to 4.75 percent earlier this month, signaling that it is concerned about continued inflation. This comes after it had previously raised the rate to 4.25 percent.
New Zealand Wage Increase
The current directive establishing New Zealand’s minimum wage, which goes into effect on April 1, will result in an increase in that country’s minimum pay. The Minimum Wage Order 2023 raises the standard minimum hourly salary to NZ$22.70, which is an increase from the previous rate of NZ$21.20.
NZDUSD is moving in the Descending channel and the market has reached the lower high area of the channel
According to the order, the hourly minimum pay for trainees and workers just beginning their careers raised to NZ$18.16 from the previous rate of NZ$16.96.
Moreover, the directive establishes minimum salaries for employees who are paid on a daily, weekly, or biweekly basis. Trainees are employees who are at least 20 years old and whose employment contracts include that they must enroll in apprenticeships or other forms of vocational training.
New Zealand-China Cattle Trade
Before a prohibition on the trade goes into effect at the end of the next month, it is anticipated that three further shipments of live cattle would travel from New Zealand to China. When the government announced that it would stop allowing livestock to be shipped by sea after the year 2021, it also provided the industry with a transition period of two years. This allowed exports to continue under the more stringent regulations that had been implemented after the sinking of the Gulf Livestock 1.
GBPNZD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel.
When it sank in the East China Sea in the year 2020, the Gulf Livestock 1 had about 6000 livestock as well as 43 crew members on board, including two people from New Zealand. According to the figures provided by the Ministry for Primary Industries, a total of 134,590 live cattle were exported to China in 2012. These animals are being utilized for the purpose of breeding. In comparison, 134,722 cattle were sent to the nation in 2021, and 109,921 cattle were exported to the country in 2020.
However, the numbers were significantly lower in 2019, when just under 40,000 cattle were shipped to the country. According to MPI, New Zealand has already seen two livestock exports this year, with a combined total of 11,574 cattle leaving the country. Further, preparations were being made for three more shipments, the most recent of which was planned to leave the Napier Port on April 19th.
RBNZ Orr Speech
The governor of the Reserve Bank of New Zealand Adrian Orr recently gave a speech where he discussed the economic well-being of the nation in regard to the current fear of recession. He reveals, “We are working with the finance sector and other stakeholders to develop a deeper understanding of the interaction between our policies and financial inclusion. The long-term aim is to ensure that consideration of financial inclusion is firmly embedded in the Reserve Bank’s normal business practices. As part of this, the Reserve Bank is also leading the Council of Financial Regulators’ work on financial inclusion. Financial inclusion is more important for some elements of our statutory objectives than for others. For example, financial inclusion is particularly relevant for central bank functions when we talk about access to cash, whereas the link between inclusion and stability is more indirect.”
AUDNZD is moving in the Descending channel and the market has fallen from the lower high area of the channel.
“There are many examples across our activities where we need to articulate our appetite for actively addressing barriers to inclusion and define what the trade-offs are. A current example is the new Deposit Takers legislation that will govern how we supervise all deposit takers and the choices we will need to make on regulatory proportionality. We are also considering financial inclusion in our new role of stewarding the cash system – producing, storing, and distributing cash to the public in concert with a wide range of private sector participants. Inclusion is also a key principle behind our design work on a Central Bank Digital Currency. Finally – there is not a one-way relationship between financial inclusion and our other objectives of stability. There are clear feedback loops and trade-offs between ensuring something is stable or efficient, and inclusive. Let’s explore some of these trade-offs.”
New Zealand Deficits
As a result of the country’s restrictive immigration policies and massive trade imbalance, the nation’s balance of payments deficit has ballooned to its largest level in more than three decades. The gap between the amount of money the economy makes and the amount of money it spends reached $33.8 billion for the year that ended in December. This represents an all-time high 8.9 percent of the value of the economy and is the highest it has been since the current series began in 1988. In general terms, the country is living far over its means, and the gap is being supplied by borrowing money.
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According to the senior manager of Stats New Zealand, Paul Pascoe, the increasing deficit was mostly caused by a rise in the import of goods and services, particularly machinery, petrol, and automobiles, as well as an increase in the cost of traveling. The growth in imports was 25.8 percent, while the growth in revenues from exports was only 16.8 percent. This is because tourism, which is a vital source of foreign exchange earnings, is still being hurt by the gradual rebound in international travel after limitations on Covid-19 were relaxed.
A further contributor to the imbalance was the fact that international investors were more successful with the returns on their assets in Aotearoa than New Zealand residents were with their investments in other countries. The data also showed an inflow of $3.3 billion into the country in the final three months of the year, which covered part of the deficit. On the other hand, New Zealand investors scaled back their overseas investments to the tune of $4 billion, compared to a reduction of $686 million in foreign investments here in New Zealand.
The disparity between New Zealand’s financial assets and liabilities with the rest of the globe shrunk marginally to a deficit of $193 billion, which is equivalent to approximately half the value of the economy. Rating agencies pay attention to the magnitude of the balance of payments deficit, and they have the ability to lower New Zealand’s rating, which would make it more costly for the country to borrow money if there were fears that the deficit was growing out of hand.
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