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by Kate Wilson on August 24, 2020

Why the NZD could act as a safe haven in 2020

The coronavirus pandemic, roaming in 2020 has become a headache for countries. Not only the virus significantly disrupted the regular way of life, but at the same time affected various currencies. People were left jobless, markets crashed, and what more experts predict is that the pandemic could last 2 years more.

A relatively low number of countries managed to deal with the virus effectively and New Zealand was a unique exception. With the help of the country’s Prime Minister, Jacinda Ardern, for a very long time, New Zealand has not had a single case of the coronavirus. This in its turn, notably improved the NZD and the claim that it could act as a safe haven in 2020 is not baseless.

Charts show improved NZD

The New Zealand dollar is one of the most frequently traded global currencies. If we take a look at the 2020 chart, it is clearly visible that NZD performed greatly even during the pandemic. It only had a bad period in March. Otherwise, it was excellent. Considering that it is an exotic currency on the foreign exchange market, even Kiwi forex brokers advised traders to use NZD because of its stability in 2020. And it is not surprising – the country dealt with the virus so effectively that it directly affected the national currency too.

A surge in NZD predicted in 2019

In 2019 strategists at Morgan Stanley were the ones who predicted the strengthening of the NZD. Of course, they had no idea about the coronavirus pandemic but still, their expectations came true. They said that fall in the dollar would become one of the main trends in 2020. They predicted that the dollar would be hit by stronger global growth outside the US and dwindling portfolio inflows. The American investment bank also expected the pound, euro, and New Zealand dollar to strengthen against the US dollar, while in emerging markets they offer to sell the dollar against the Indian rupee.

Right now almost everyone recommends buying the New Zealand dollar (NZD/USD) as the coronavirus still roams around the world. It is difficult not to agree with them because given the situation in the world the NZD is the main favorite to become a safe haven currency.

An exceptional country

In New Zealand, for the first time in 102 days, non-imported cases of coronavirus infection were detected – in Auckland, four members of the same family were COVID-positive, according to BBC News.

In Auckland, a three-day lockdown was urgently introduced from August 12. City residents were asked to stay at home, mass gatherings were prohibited, and all companies that were not vital to the city are ordered to close. The rest of New Zealand has introduced social distancing.

These measures clearly show how the country handled the outbreak.

In connection with the incident, Prime Minister Jacinda Ardern announced that she would postpone the dissolution of parliament until Monday before the upcoming elections.

Over the past 102 days, infected with COVID-19 have been identified in the country, however, all these 22 people were brought from abroad. All of them were isolated on their return.

In total, more than 1,200 cases of coronavirus infection have been identified in New Zealand since the beginning of the pandemic. 22 patients died. Since June, the country has lifted most of the quarantine restrictions that were introduced in March. It was believed that the early introduction of a lockdown, tight border controls, effective public notification, and mass testing and contact tracing helped the authorities to completely get rid of the virus in the country.

By Kate Wilson

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