29 Apr 2014
NZD supported on migration stats - BAML
FXStreet (Guatemala) - Adarsh Sinha, FX Strategist at Bank of America Merrill Lynch explained that the latest migration statistics were the second highest monthly figure on record.
Key Quotes:
"The latest migration statistics published by New Zealand (NZ) for March 2014 showed that permanent and long-term migrants into the country continued to surge by 3.8k during the month, the second highest monthly figure on record. The strong pace of inward migration to New Zealand is both symptomatic of strong domestic labor market prospects, as well as likely to add to the upward pressure on housing and consumer demand. This virtuous (and sometimes vicious) circle is primarily why the NZD exchange rate has had a good historical correlation with migration rates over a long period of time, particularly versus the AUD given the concentration of migration flows across the Tasman”.
"We note that migration is increasingly figuring in the deliberations of the RBNZ as well. Since its December policy statement, the RBNZ has highlighted the impact of rising net inward migration, most recently stating it was "boosting housing and consumer demand"."
"The RBNZ expects immigration to ease gradually albeit remain above average throughout its projection period. The main driver of this is expected to be an eventual improvement in economic conditions in Australia and elsewhere. It is noteworthy that the March Monetary Policy Statement (MPS) projections suggest the March quarter of 2014 is likely to witness the peak in inward migration, falling thereafter on a quarterly basis."
Key Quotes:
"The latest migration statistics published by New Zealand (NZ) for March 2014 showed that permanent and long-term migrants into the country continued to surge by 3.8k during the month, the second highest monthly figure on record. The strong pace of inward migration to New Zealand is both symptomatic of strong domestic labor market prospects, as well as likely to add to the upward pressure on housing and consumer demand. This virtuous (and sometimes vicious) circle is primarily why the NZD exchange rate has had a good historical correlation with migration rates over a long period of time, particularly versus the AUD given the concentration of migration flows across the Tasman”.
"We note that migration is increasingly figuring in the deliberations of the RBNZ as well. Since its December policy statement, the RBNZ has highlighted the impact of rising net inward migration, most recently stating it was "boosting housing and consumer demand"."
"The RBNZ expects immigration to ease gradually albeit remain above average throughout its projection period. The main driver of this is expected to be an eventual improvement in economic conditions in Australia and elsewhere. It is noteworthy that the March Monetary Policy Statement (MPS) projections suggest the March quarter of 2014 is likely to witness the peak in inward migration, falling thereafter on a quarterly basis."