In 2008, the New Zealand Dollar lost value against every single major currency except for the British pound, making the GBP/NZD cross the weakest major currency cross on the globe at the moment. This considered it seems unlikely that short term movement will be effected by anything other than the relative performance of each economy.

As always with currency pairs much emphasis will be placed on the key interest rate decisions in both nations, while the massive reduction of the base rate in the UK has been well publicised there have also been notable cuts over in New Zealand. The Reserve Bank of New Zealand has cut interest rates by 325bp since July, with RBNZ Governor, Bollard, saying that he believes rate cuts will not come to an end until the middle of 2009. Many analysts suggest that following this monetary easing cycle we could see a sharp recovery towards the end of the year, but that is undoubtedly dependant on the success of the RBNZ’s fiscal strategy and a cooling of the global credit crunch.

All things considered both currencies had a torrid 2008 and at least for early 2009 that looks set to continue, with the cross almost certain to be dominated by negative figures from both faltering economies. Optimists will suggest that later in the year this could well change, but the direction of the exchange rate will depend on how quickly both countries can emerge from the global credit crunch and how badly damaged they are when they do.