Are the Kiwi's Days as a Favorite Currency Numbered?

The big money (BlackRock and DWS Investment) is now betting against the New Zealand Kiwi, ostensibly because poor economic conditions could trigger the central bank to lower NZ rates (where passbook savings rates are 8.30%~8.50%) as aggressively as they had previously raised them. Currency strategists see the possibility for a two-digit correction, and are suggesting that investors shift to the Auzzie dollar instead.

Both the NZ Kiwi and Auzzie Dollar have been favorite trades Japanese individual currency traders, and Japanese investors own a large chunk of the 70%-plus of NZ bonds that are held by foreigners. These investors were not shaken out as the JPY surged past JPY100/USD and probably won't be shaken into repatriating their money back into yen now. They are more likely, as recommended, to shift into the Auzzie dollar, as overseas yields are simply too attractive versus miniscule yields on Japanese passbook savings.