Performances

One of the surprises of the year has been the lacklustre performance of the US dollar. The widely followed US Dollar Index, (which is the US dollar weighted against a basket of currencies DXY) is down 9.27 per cent year to date, despite their central bank being the first to have consistently increased interest rates during the year.

The euro defied expectations, with year to date gains of 13.14 per cent against the US dollar when many investment banks were calling for a move to parity (or beyond) for the single currency versus the dollar. We have seen the euro gaining across most of its trading partners, shrugging off election fears but ending with little change when compared against a resilient British pound.

The British pound has rebounded strongly in 2017, up 9.14 per cent against the US dollar and up 9.91 per cent versus the New Zealand dollar, as the market reprices the pound following its Brexit sell off. It is becoming clear that the United Kingdom will not be falling off a cliff, as many predicted ahead of the vote. The decision to exit the restrictive economic arrangement may well pay

A currency is a unit of account, and is divisible, which bitcoin satisfies but falters at present when it comes to being a medium of exchange.

dividends going forward.

Locally, our NZ dollar struggled through what was an eventful year, which brought a change in Government, while our agricultural sector experienced mixed results. While relatively unchanged against the USD, we are ending the year lower against all our major trading partners, down 6.43 per cent versus the Australian dollar, down 13.7 per cent versus the euro and down 4.59 per cent versus the Japanese yen. The declining currency was supportive to exporters while increasing import costs such as energy.

These moves pale in comparison to the crypto currency space, with bitcoin up a phenomenal 1185 per cent for the year to date. Whether bitcoin should be included as currency, a form of money, or neither, is being hotly debated around the world.

A currency is a unit of account, and is divisible, which bitcoin satisfies but falters at present when it comes to being a medium of exchange. Importantly, the key function of