Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Kiwi ignores RBNZ jawboning on 'over-valued' currency

Kiwi ignores RBNZ jawboning on 'over-valued' currency

Jan. 31 (BusinessDesk) – The New Zealand dollar rose after Reserve Bank of New Zealand (RBNZ) held the official cash rate at 2.5 percent even though the central bank said the currency is overvalued.

The kiwi rose 83.40 US cents from 83.11 cents just before the review and 83.71 cents at 5pm on Wednesday.

It had fallen overnight to 82.99 cents when global sentiment took a hit from news the US economy contracted in the fourth quarter for the first time since 2009, and the S&P 500 slipped from a five-year high.

In leaving the official cash rate unchanged at 2.5 percent RBNZ Governor Graeme Wheeler said global growth will recover in 2013 as will the local economy.

He said subdued inflation mainly reflected the impact of the overvalued New Zealand dollar.

“The high currency is directly supressing inflation on traded goods, and is undermining profitability in export and import competing industries.

“At the same time, the labour market remains weak and fiscal consolidation is dampening growth,” he said.

US gross domestic product fell at a 0.1 percent annual rate after expanding at a 3.1 percent clip in the third quarter. No economists polled by Reuters had predicted a contraction.

“The fall is attributable to cutbacks in government spending and weaker than expected restocking by businesses. Remarkably analysts were fairly upbeat about the figures,” Bancorp Treasury Services said.

The US Federal Open Market Committee, as expected, left in place its bond-buying stimulus plan, and kept interest rates low, in a statement released just ahead of the RBNZ rate review.

It regarded the pullback in the US economy as temporary and indicated it will keep purchasing securities until the outlook for employment improves.

The US payrolls report, due Saturday NZ time, is also a big event for the market but evidence ahead of it has been conflicting.

The Australian fourth-quarter terms of trade report today will also be watched.

The kiwi was at 80.13 Australian cents after 9am from 79.74 cents at 8am and 79.94 cents at 5pm on Wednesday.

It was at 75.70 yen at 8am from 76.04 yen at 5pm on Wednesday, at 61.29 euro cents from 62.05 cents and was at 52.63 British pence from 53.13.

The trade-weighted index was at 74.85 from 75.29.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Half Full: Dairy Payouts Steady, Cash Will Be Tight

Industry body DairyNZ is advising farmers to focus on strong cashflow management as they look ahead to the 2015-16 season following Fonterra's half-year results announcement today. More>>

ALSO:

First Union: Cotton On Plans To Use “Tea Break” Law

“The Prime Minister reassured New Zealanders that ‘post the passing of this law, will you all of a sudden find thousands of workers who are denied having a tea break? The answer is absolutely not’... Cotton On is proposing to remove tea and meal breaks for workers in its safety sensitive distribution centre. How long before other major chains try and follow suit?” More>>

ALSO:

Scoop Business: NZ-Korea FTA Signed Amid Spying, Lost Sovereignty Claims

A long-awaited free trade agreement between New Zealand and South Korea has been signed in Seoul by Prime Minister John Key and the Korean president, Park Geun-hye. More>>

ALSO:

PM Visit: NZ And Viet Nam Agree Ambitious Trade Target

New Zealand and Viet Nam have agreed an ambitious target of doubling two-way goods and service trade to around $2.2 billion by 2020, Prime Minister John Key has announced. More>>

ALSO:

Scoop Business: NZ Economy Grows 0.8% In Fourth Quarter

The New Zealand economy expanded in the fourth quarter as tourists drove growth in retailing and accommodation, and property sales increased demand for real estate services. More>>

ALSO:

Scoop Business: RBNZ’s Wheeler Keeps OCR On Hold, No Rate Hikes Ahead

The Reserve Bank has removed the prospect of future interest rate hikes from its forecast horizon as a strong kiwi dollar and cheap oil hold down inflation, and the central bank ponders whether to lower its assessment of where “neutral” interest rates should be. The kiwi dollar gained. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news