Cash manager of a multinational corporation based in the United States tasked with gaining the highest yield for our treasury cash
Rebecca Cline
As the cash manager of a multinational corporation based in the United States tasked with gaining the highest yield for our treasury cash, I would invest the funds into New Zealand. The average yield in New Zealand is 1.82% and the information provided from Bloomberg shows that the increase begins in day one and continues through the investment (Bloomberg, 2021).
One thing to be aware of is the current interest rates of the country that you are looking to invest in. currently in New Zealand, the interest rates are low, at 0.25%. Over the course of this year, it is predicted that the interest rate will increase significantly. The potential interest rate increase could be anywhere from .5 to .75% by the end of 2021 (Brownsey, 2021). “This will be in response to rising inflation – the primary target for the Reserve Bank which is keen to keep long term inflation between 1 per cent and 3 per cent” (Brownsey, 2021). It would be an ideal time to invest in New Zealand due to the expected increase in interest rates. Due to the interest rates being low, it would be an ideal time to invest in the country.
Choosing New Zealand seems like a logical choice with the economy making a strong come back after being affected by the global pandemic. Investing now would allow the company to get in at a good rate and enjoy the increase that the investment will see with the rebounding of the economy.
The expected yield for the coming year from investments in New Zealand is roughly 18% (Bloomberg, 2021).
Resources:
Bloomberg. (2021). New Zealand Government Bond. Bloomberg.com. https://www.bloomberg.com/quote/GTNZD10Y:GOV.
Brownsey, P. (2021, July 25). What’s next for interest rates? Stuff. https://www.stuff.co.nz/business/opinion-analysis/300365429/whats-next-for-interest-rates.
Menon, P. (2021, July 6). Nz business outlook rebounds sharply, triggering rate hike speculation. Reuters. https://www.reuters.com/world/asia-pacific/nz-business-outlook-rebounds-sharply-triggering-rate-hike-speculation-2021-07-05/.
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