- 22/02/2006
XtraMSN and AgenciesThe New Zealand dollar has dropped sharply to its lowest level in 17 months against the greenback, dipping to 66 U.S. cents overnight.Business analyst Roger Kerr says overseas investors are picking New Zealand’s interest rates will fall later in the year.
“A lot of it is speculative selling from US hedge funds which believe the New Zealand dollar will be lower in the future.”
Many analysts believe that interest rates will rise in the U.S. and in the eurozone over the year, reducing the attractiveness of the New Zealand dollar.
Looks like short term presurre off rates in NZ. The reserve has also been doing its best to reduce the demand for the nz currency in asia. Explains why banks are again dropping their fixed rates (partially explains)
me says an nz dollar below 90 aud for about 12 to 18 months would be a good result.
regards
Don
D&L Property Projects Ltd
Sourcing Quality Investments in New Zealand.Email to receive current deals & New Zealand Information Sheet.
[email protected]Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
i went short NZD – USD last week, looking quite good now just in profit today,
the US was always going to increase and will do so for the next 6 months at least
rumors are a lot of the big investment banks are taking big positions against the Kiwi ie long the USD against the NZD
when the going gets weird the weird turn pro
Hi Guys
this is exactly why i was telling people over the past 4 months to get as much money out of NZ as possible, either sell or finance out, don’t hold properties in NZ without a mortgage. If the Kiwi drops significantly then those who own a lot of Kiwi $ will loose. I’ve got most on my money in the US now so strenghtening of the US dollar will be a very nice bonus for me.[biggrin]
Lets hope for all the RBNZ lowers interest rates, DLPP do you get the feeling the governor hasn’t a clue about managing the economy ? That was my feelings after living there for the past 2 years.
regards westan
Over 100 deals done in the USA in 2005
Buy in the USA email me at [email protected]I posted the following on 9/11/05. Did not receive any replies to the posting.
“What about the exchange rate worries in relation to owning overseas properties?.
NZ for example averages an exchange rate with Australia of $1A equaly 75cents NZ. At the moment it is around 90cents NZ and many commentators are saying the NZ dollar is overvalued.
I see Australian investors in NZ losing 10%-15% on the value of there investments purely in exchange rate losses in the next couple of years.
To me it is hard enough finding great investment properties without trying to guess what exchange rates are doing aswell.”I agree with Westan any Australians investing in NZ property needs to take stock of there investments there taking in to account exchange rate forecasts.
ned kelly
That’s a hard one westan! At it’s widest the rates difference between aus and nz was 1.75% and this caused the strongest kiwi against the ozzie in 17 years. Now it looks like there is talk of a rate rise in oz later in the year and us markets a bracing for a round of rate rises. The nz currency and rates should settle down nicely to the long term trend.
The up side is that if you did have spare cash laying around in one of your trusts bank accounts you could be earning 7.35% on call(but that is just being lazy really).
Their are alot of things the reserve can’t control so their is alot of arm waving and shouting that goes with the policies. Make them look a bit silly some times.
D&L Property Projects Ltd
Sourcing Quality Investments in New Zealand.Email to receive current deals & New Zealand Information Sheet.
[email protected]Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
You can’t have it both ways ned. If you are going to invest in anything that has a foreign currency exposure you have to factor that in.
Some people by more of things when they get cheaper in relative terms.
We still don’t have a single currency yet as of the 6th of feb howard and clark said it was of the agenda for the short to medium term.
Then I would be confused – so how many tasman dollars would my investments be worth – i’ll have to google “euro” and learn about the transitional introduction and withrawal of currencies in semi free trade markets.
D&L Property Projects Ltd
Sourcing Quality Investments in New Zealand.Email to receive current deals & New Zealand Information Sheet.
[email protected]Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Hi All
I am glad I followed Westan’s advice and I pulled out of NZ completely, all I have in NZ is a small bank balance.
I am now finding good deals in my own backyard.
KerwynIf you are investing in property offshore and ignore the Forex risk then you are leaving yourself exposed it must be part of your overall strategy and you should have a plan on how to mitigate forex exposure. I always have an active role in it as my home currency is the Pound but have IPs in NZ and the USA so those three crosses i actively trade as well as the fact it keeps me current with timings on when to best move currency between the three countries
when the going gets weird the weird turn pro
HI Kiwiwduvet,
Yes. very important part of the strategy.
On average ofver the past 20 years the kiwi moves about 15%. So timing cashflows in and out for purchases and expenses is an important part.
What I am finding now is that 75% of all my new clients are either based in NZ or are expats living in oz or the uk. These people are less likely to pay asking price for a property and realise that buying for magic number yields alone leads to paying too much for poor stock. Big problems and headaches.
D&L Property Projects Ltd
Sourcing Quality Investments in New Zealand.Email to receive current deals & New Zealand Information Sheet.
[email protected]Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Update re rates kiwi bank is now doing 7.5% for 3 year fixed
this is exactly why i was telling people over the past 4 months to get as much money out of NZ as possible, either sell or finance out, don’t hold properties in NZ without a mortgage. If the Kiwi drops significantly then those who own a lot of Kiwi $ will loose. I’ve got most on my money in the US now so strenghtening of the US dollar will be a very nice bonus for meHi Westan – this is not an attack but the flaw I can see with this strategy is that you are constantly jumping in an out of markets and from country to country running from interest rates and currency movements.
Alternatively, you could factor them into your investment decisions in the begining. It seems more like the type of strategy or psychology that a day trader or forex trader might use rather than smoothly translating to property investment.
So to be fair – my strategy has been to set up my nz portfolio as a seperate entity with its own finance and structure and income. It is insulated against currency risk until some time over the horizon and is insulated against interest rates as they are all fixed spread over 3 to 5 years at a staggered rate.
We were lucky enough to keep our entire oz portfolio intact which is also seperate and supports itself. Without using any equity loan products. So there is no cross over of portfolios or funds.
If we choose to invest in another country (perhaps somewhere warmer) we would do so by taking surplus cash from either portfolio as seed money, set up the appropriate structure, obtain finance and start the process all over again.
regards
don
D&L Property Projects Ltd
Sourcing Quality Investments in New Zealand.Email to receive current deals & New Zealand Information Sheet.
[email protected]Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Hi Don
I suppose one of the big difference i have to others is that i now live off my investments dollars so its important to get as high return on each dollar as possible. If i can sell an assett thats not going to appreciate anymore thats showing a 10 Net return and put the money into an assett thats likely to rise and will show a net return of 20% then i need to do it, and i would think others should if they are serious about investing and creating wealth. The key for me is to make as much money as quickly as possible.
Now the reason i said those comments with you have quote above(your reply says that you have already done one of the things that i mentioned) are for people aren’t aware of the trouble NZ is heading for. You are and have made the adjustments required.
But if someone owns a property and has lots of cash in the deal this is how much it could hurt –
When i was telling people to get out of NZ currency last Nov the AU dollar was worth $1.06. If you took 500K out of NZ then (either as a sale or as a refinance) you would have done the right thing. Because now the dollar is worth $1.12 (as at 28-2-06) so you would only get $445K back thats a loss of $55K Ooch[bawl][
].And if the Kiwi drops more then you get hurt more !
regards westan
We find deals in the USA with growth potential, with equity and showing at least 14% gross returns. Email at [email protected]
Hi Westan,
There is alot in this discussion that is getting a bit circular and to observers it is probably more obvious than to you and I.
We are talking about different things.
I am talking about long term assest accumulation.
You are talking about property trading ie buying and turning over properties within 3 to 12 months.
The currency arguement is flawed in that it ignores gearing which applies to most investors.
In NZ property traders pay capital gains tax in the structures. Then more tax upon distribution.
D&L Property Projects Ltd
Sourcing Quality Investments in New Zealand.Email to receive current deals & New Zealand Information Sheet.
[email protected]Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
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