The New Zealand Dollar has been attracting interest from currency investors in recent years. Yet, New Zealand’s economy is now showing some red flags which suggest that the NZD may be an undesirable investment. In comparison, the Iraqi Dinar (IQD) is showing excellent potential as a replacement currency for investors who are eager to remove the Dollar from their portfolios.
The New Zealand Dollar is a weak investment
At the beginning of 2014, the New Zealand Dollar appeared to be a reasonable investment, but has since lost considerable value. Some investors are hopeful that the Dollar will rebound, but there are ominous signs that its value might drop much further. Here’s why investors should consider moving out of the Dollar and into the Dinar.
Threats from NZ’s central bankers
The Reserve Bank of New Zealand is considering the idea of implementing monetary policies that would weaken the Dollar, because some lawmakers believe it’s too strong right now. In fact, the Reserve Bank’s recent statement alone caused the currency to decline in value by 8%. If the proposed monetary policies are enacted, the currency will probably drop even further.
In contrast the Central Bank of Iraq (CBI) is moving in the opposite direction. Some of the leaders at the CBI believe the Iraqi economy will grow even more quickly if the Dinar is revalued, because it will reduce the cost of living and decrease the price of imports for Iraqis.
Sluggish dairy industry
The New Zealand economy is heavily dependent on the country’s dairy exports. Once a strong driver of New Zealand’s economy, nowadays it seems that the dairy industry’s milk has run dry. Issues such as fears of an Ebola virus outbreak and declining milk prices have combined to cause problems for the entire economy.
Further, as economist Keith Woodford has indicated, New Zealanders are extremely pessimistic about the future of the dairy industry because it causes widespread pollution. The industry may struggle even more if environmentally-conscious people continue to boycott it. As a result of these domestic industrial concerns, the value of the New Zealand Dollar may fall even further.
On the other hand, Iraq’s most important industry is oil, which is booming. The regional authorities in Iraq’s northern Kurdish regions just announced that oil exports have increased 60% during the past month alone, and other regions of Iraq are releasing similar glowing reports.
Since 90% of Iraq’s GDP comes from oil exports, increases in oil production mean higher revenues will boost the economy and lift the value of the Dinar.
The unemployment rate in New Zealand is near its highest level in a decade. The number of jobless citizens is expected to increase further as the economy dwindles, due to problems in the nation’s agricultural industries. Until its regional trading partners’ economies improve, New Zealand’s unemployment rate is likely to rise even further.
Meanwhile, the Iraqi economy is expanding quickly and creating numerous new jobs. Data from the Central Statistical Organization of Iraq indicates that Iraq’s unemployment rate has fallen by nearly 50% since 2004. The rate is likely to decline even further as the oil industry grows, and foreign businesses invest in the economy.
Overly-restrictive business regulations have stalled New Zealand’s economy
Small and medium sized businesses throughout New Zealand complain that there are too many regulations. Leaders in some agricultural industries have warned that burdensome environmental regulations are making it difficult to compete with other Pacific dairy-producing nations. These issues are damaging the country’s economy.
Meanwhile, in Iraq the government is being careful to impose as few regulations on business growth as possible, so the economy will continue to thrive.
Read More about Dinar Investment at IQD vs. NZD: The Dinar Is Clearly A Better Investment Than The Dollar