The New Zealand dollar dropped today against its Australian counterpart on the concerns that the Aussie will be more attractive to the investors, interested in carry trade, because of the higher interest rates in Australia.

John Key, the Prime Minister of New Zealand, said:

The carry trade is there although one could make the case it is less attractive at the moment than Australia where interest rates are a full 2 percentage points higher than ours. The Reserve Bank governor has been reasonably transparent, that rates wouldn’t go up until the middle of the year and I’ve got no reason to think he’s changing from that.

AUD/NZD rose to 1.2326 as of 12:23 GMT today from its opening level of 1.2309. NZD/USD traded at 0.6760 after it opened at 0.6748.

If you have any questions, comments or opinions regarding the New Zealand Dollar, feel free to post them using the commentary form below.