Forum Archive Index - February 2003

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi graham,

>
>
>Can anyone help with Exchange rate info?
>I am transferring NZ dollars to Aus.
>If I transfer within 1 week should I -
>guess if the Exchange rate will get worse over the week
>or
>tranfer anyway without waiting as the rate is high anyway,
>or
>monitor the exchange rate on the web site of my bank and choose a
>high day from that, Any info/urls I would appreciate. I can specify
>the day I need the transfer -not the hour.
>
>

Trying to figure out where an exchange rate is going to move at any 
time, let alone within a week, is an incredibly difficult and 
probably fruitless exercise.   About the only thing you could do is 
find the most reputable economist you can, ask them which way the 
exchange rate is going, then go ahead with transaction assuming the 
exact opposite will happen ;-).

I remember when faced with a similar dilemma, I used to play a game 
of going to one bank that fixed their exchange rate at 9am for three 
hours and another bank next door who always used a continuously 
changing floating rate.  I'd figure out what I had to pay with the 
fixed exchange rate first, then swing next door to see if the 
floating rate was better.  If it was, I'd put the transaction 
through.  If not, it was back to the first bank.   I think that times 
have now moved on and all the banks use the floating rate system.  
(However, if I am wrong, and any sharechatters know of a bank that 
fixes their rate first thing in the morning, please tell us!).

Depending on the amount of money involved you could put half through 
on Monday and the rest on Friday (say) so you will get an averaging 
effect over the two days.  By doing this you will incur double bank 
charges though.  Of course if you decide to do this, please let us 
know first.  Such an action plan will inevitably ensure that the most 
favourable time to move funds will be Tuesday, Wednesday or Thursday, 
a fact which will be helpful to others ;-).

I notice you say the exchange rate is 'high' vs Australia, but is 
it?   Certainly it is historically high.  But given that the monetary 
policy in New Zealand is in theory now being operated along very 
similar lines to the monetary policy regime in Australia, you may 
find that the $NZ and $AUS move much closer together now than they 
have in past years.  It is possible we may be 'stuck' with an 
exchange rate of $1NZ = low ninety cents Australian for quite some 
time.

The other point to make is that if you are buying Australian shares, 
those shares may have a natural currency hedge built into the share 
price.  The fact that the $NZ is high may mean the share price is $A 
is high, and vica versa.  Remember to keep your eye on the big 
picture.

SNOOPY



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