Nevertheless, New Zealand’s growth rate is forecasted to expand 0.4% in the third quarter after unexpectedly increasing 0.1% during the three-months through June, while the annualized rate is projected to contract 1.3% from the previous year after tumbling 2.1% in the second quarter. Moreover, the current account is anticipated to record a deficit of 2.030B for the third quarter after posting a 0.124B surplus during the previous three-month period as global trade conditions remain subdued, and the marked appreciation in the exchange rate may continue to weigh on the real economy as it hampers the prospects for an export-led recovery. However, as risk trends continue to drive price action in the currency market, a rise in risk appetite is likely to drive the New Zealand dollar higher as market participants move into higher-yielding investments. At the same time, the shortened trading week ahead of the Christmas holiday is likely to spur increased volatility in the exchange rate as market liquidity tapers off, and there is a risk that we will see erratic movements across the major currencies as we head into the New Year.
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