Welcome to the March 8 edition of the BNZ Weekly Overview.
Over the past week we have seen the Kiwi dollar drop firmly against other currencies on the back of expectations of narrowing interest rate differentials. One can never tell where a period of currency weakness will end but for now with increasing talk about rising interest rates eventually in Japan and extra rises in the United States we could easily see further weakness in the NZD. But exporters should remember that with commodity prices for New Zealand exports still well above long-term averages and with our interest rates still very attractive we are sticking with our forecast that come the end of this year we will be trading close to us 60¢.
Tomorrow the Reserve Bank review their cash rate. We expect no change, especially in light of the extra inflation which the falling currency will cause.