When yields go up, move down under.

The article reports on how fiscal and monetary policies have helped in balancing New Zealand's budget and enhanced the rating of its bonds in the equity market during 1990s. In the aftermath of the international bond markets' meltdown, fixed-interest instruments have been performing particularly well in New Zealand. New Zealand's 10-year government bonds rose from 7.61% to 8.15%, a comparatively low negative return of 11.5% which, because of turbulence elsewhere, elevated bonds into fifth position worldwide. In the same period, the New Zealand dollar appreciated from 56.42 to 57.10 in its trade-weighted index, representing an annual gain of 7% which was estimated probably the best currency performance in the world in that period. Due to this, there was a fast trend of international capital inflow in New Zealand and was assumed as the result of ten years of tough fiscal policies. The government has adopted a policy of fiscal rectitude and a new Fiscal Responsibility Act which became law only a few days before the budget and has helped a lot in improving budgetary performance. INSET: Hand-off supervision..