Successful forex trading requires participants to monitor the events of the financial institutions that control the world’s currencies.

 

Like most central banks worldwide, the Reserve Bank of New Zealand strives to keep their country’s financial system stable and efficient. The Reserve was established in 1939 and is entirely centralized and government-owned.

 

This actually sets it apart from other major reserve banks, including the US Federal Reserve. Being centralized allows the Reserve Bank of New Zealand to take a much stronger hand in the regulation of monetary activities. A forex broker or trader interested in investing in New Zealand Dollars would be wise to pay close attention to policies and announcements coming from the country’s central bank, as they will directly indicate how the currency fluctuates.

 

Stability is important for forex trading, and New Zealand is said to have a very stable money supply compared to other countries, possibly due to the structure of their Reserve Bank.

 

The Reserve also requires quarterly disclosure statements from all banks that operate within the country; this allows the Reserve to maintain a high level of control over currency and also gives the institution valuable information concerning the smaller bank’s financial health and activities.

 

Forex brokers and traders should also be interested in the Official Cash Rate (OCR), which is the national interest rate that is set by the Reserve. While the Reserve sometimes lends to individual smaller banks in the country at or below OCR, no banks are allowed to charge any interest rates that are higher than the OCR without being undercut by funds from the Reserve. This makes the OCR an unusually stable interest rate.

 

An involved forex broker or trader will pay a decent amount of attention to the actions and announcements of many countries’ central banks in order to judge probable currency fluctuation. Some examples include the nearby Reserve Bank of Australia, the Swiss National Bank and the Bank of England.

 

Check out more of our forex trading resource pages for additional general information on common economic indicators.