Welcome to the February 23 edition of the BNZ Weekly Overview.
There has been some excitement in the FX market this week with the Kiwi dollar dropping 1.5¢ against the U.S. dollar and 1¢ against the Australian dollar. Exporters may want to contain their excitement for the moment however as some of the rumors which have driven our currency lower may prove unfounded - namely Japanese investment banks no longer promoting Kiwi dollar denominated bond issues. Plus, we still don't believe the Reserve Bank will be easing monetary policy until early next year and the chances of an early easing have diminished with the currency now sitting almost 3% below the level the Reserve Bank assumed in their inflation forecasts.
But it has still been a good week for exporters and the drift in the Kiwi dollar is definitely downward through this year and 2007.