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NZD/USD depreciated 0.7% to 06395 on Thursday, with a soft bias inside the 0.6190-0.6530 range set on 30 November. New Zealand Prime Minister Jacinda Ardern announced that she would step down by 7 February. The general election will be held on 14 October. Despite her international appeal, New Zealanders are frustrated with the cost-of-living crisis, a housing slump, and interest rate spikes. Against this backdrop, the consensus is for private consumption expenditure to contract by 2-3% in 1Q23. According to a survey by the New Zealand Institute of Economic Research, business confidence was the weakest since 1974. Seventy percent of the respondents expect conditions to deteriorate in the next 12 months and are looking to scale back investment and hiring. Hence, it is doubtful if the Reserve Bank of New Zealand can deliver a second 75 bps hike (consensus) to 5% on 22 February.
USD/VND was stable at around 23440 this weekdespite Vietnamese President Nguyen Phuc’s resignation on 17 January. Although Vietnam is a communist country, it has no paramount leaders like China and North Korea. The government is led by four pillars – the party’s secretary, the president, the prime minister, and the house speaker. The presidency is considered a ceremonial post. While not immune to the global slowdown, the Vietnamese economy expects a positive impact from China’s reopening later this year. On an indexed basis, USD/VND tracked USD/SGD closely in the first nine months of 2022 before paying more attention to USD/CNY. Singapore is one of Vietnam’s largest investors, and China is its largest trading partner. Expecting the USD to hold up against SGD and CNY during the global slowdown, we see USD/VND edging up to 23680 first in 1Q23 before easing to 23310 by the end of the year.
Quote of the day
“Politicians are human. We give all that we can, for as long as we can, and then it’s time. And for me, it’s time.”
Jacinda Ardern
20 January in history
Philippine President Joseph Estrada was ousted in a nonviolent revolution in 2001.
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