The New Zealand dollar dropped to the monthly low against the U.S. dollar today as the S&P rating agency revised the countrys foreign currency credit rating outlook from stable to negative.
Standard & Poors, one of the worlds leading credit rating agencies, confirmed New Zealands AA+ foreign currency credit rating and revised its outlook to negative yesterday. The countrys currency reacted with a drop as the confidence in the national economy and the ability of the business to get the refinancing declined significantly after the aforementioned event.
The kiwi (a nickname, by which the New Zealand dollar is known) also fell sharply against the Japanese yen and the Australian dollar. The decline against the latter signals that the current bearish trend is caused almost solely by the credit rating outlook change and has little to do with the currently popular carry trade unwinding.
Analysts point at the New Zealand dollar as one of the clear Forex outsiders. Its position is worse than the one of the Australian dollar and, while those two are closely related (both Australia and New Zealand are export-orientated economies), the AUD/NZD becomes an attractive investment opportunity today.
NZD/USD fell from 0.5730 to 0.5563 as of 8:38 GMT today with the daily low at 0.5556 — the minimum level since December 16. NZD/JPY declined from 51.19 to 49.39, while AUD/NZD rose from 1.1853 to 1.2086 today.
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