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More currency predictions/ramblings
More currency predictions that I hope will NEVER come true. Our President, Zaphod is correct that I pointed out we would witness Dollar for Dollar parity with Canada. It wasn’t a lucky guess and I should have taken action to retain more of my loonies.
Next on the chopping block will be the Australian Dollar, Swiss Franc and possibly the New Zealand Dollar. Here is why: Australia is just like Canada insofar as it’s a resource driven economy riding high on the East Asian boom. Even if East Asia dropped off the face of the planet, the Europeans and us in the North American Union would turn to it for goodies. By the way, we only get $1.15 of theirs for one of our greenbacks. At the end of January 2007 we were able to get $1.30 Murdoch bucks for ours. During the same time period, our Dollar would fetch between $1.15 or $1.20 Canadian. Are you seeing a price pattern here?
On the topic of the Canadian Dollar, we use to get $1.50 of theirs back in February 2003 easily. No sweat, no problem.
Next winner. The Swiss Franc. Yes, they committed the sin of removing any gold backing to their currency and joining the United Nations. Still it would have been awesome to buy it at 1.50 francs to the Dollar around the one year anniversary of 9/11. Today, we’re at 1.17, keep in mind the Australian Dollar is at $1.15AUS to ours. Are you noticing more patterns here?
I am noticing when currencies are fairly liquid and transparent starting out in the mid-1.5’s against the Federal Reserve Note and our financial books are a mess, we tend to take a beating. The New Zealand Dollar has a way to go at $1.35NZD but not too long ago, at the end of 2002 you would have received TWO NEW ZEALAND DOLLARS FOR ONE U.S DOLLAR! The day it goes PARITY, will be total bliss. Keep in mind interest rates in New Zealand are way high. HSBC savings gives you over 7 percent!!!! And, you’re in an APPRECIATING currency.
Here is a hypothetical scenario, December 2002 you put $1,000.00 USD into HSBC of New Zealand, they say, here is $2,000.00 NZ and we’ll pay you 7% per year. Back then rates in New Zealand were a bit higher, but you’ll get my point quickly. This December you would have $2,800.00 NZ in that same account provided you paid no taxes on the interest. In U.S dollars that amounts to over $2,000.00, you would have DOUBLED your money in 5 years.
New Zealand is NOT a crappy third world hellhole. Granted, it is doubtful that the Kiwi will go beyond parity with our own currency. Why? Because with such a strong currency you couldn’t possibly maintain such high interest rates. In other words, they will cut their own interest rates to preclude that from happening and to take advantage of their new found status. Why? Because all countries do it when they realize they’ve discovered “alchemy.”
In conclusion, assuming the Federal Reserve Note continues to fall, we will see parity with the Australian Dollar, the Swiss Franc and the New Zealand Dollar within the next 18-24 months or far less. A long shot is the Singapore Dollar at about $1.50 of theirs for one of ours. I say this because Singapore is not known for it’s economic/political transparency, it’s not a resource rich city-state and they can’t afford a currency that is too strong. The only strength Singapore has besides being somewhat low taxed and somewhat competitive is the large Sovereign Wealth Funds it has accrued. Behind Abu Dhabi’s nearly $1trillion [U.S or Canadian], Singapore cumulatively has about $500Billion, that’s a lot for a place with less folks than Long Island.
It is times like these that I wish I ran some small country that had it’s own Dollar, so I could ride high on this tidal wave of appreciation. Over and out.
Hungry for more?
Interesting predictions. It’s long term ones like this that make surfing the web in the future more fun.