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


NZ dollar TWI rises near record high as local economy shines

NZ dollar TWI climbs near record high as local economy shines

By Paul McBeth

Jan. 15 (BusinessDesk) - The New Zealand dollar closed in on last April’s record high on a trade-weighted basis as the local economy gathers momentum, fuelling expectations the Reserve Bank will have to hike interest rates to head off future inflation.

The trade-weighted index rose to 79.10 at 8am in Wellington from 78.82 yesterday, the highest since it hit a post-float record 79.39 in April last year. The kiwi was little changed at 83.77 US cents at 8am from 83.70 cents yesterday, having touched 84.32 cents in Northern Hemisphere trading, the highest since late October.

Traders are pricing in 116 basis points of increases to the 2.5 percent official cash rate over the coming 12 months, according to the Overnight Index Swap curve as local economic data shows New Zealand’s recovery is accelerating. Upbeat business confidence, retail sales, and property value figures yesterday added to the optimism view of the New Zealand’s economy.

“We had business confidence yesterday that was an exceptionally elevated level, the best in 20 years,” said Stuart Ive, senior adviser at OMF in Wellington. “Against the US dollar, the kiwi’s holding its own, and against everything else we’re reaching for the sky.”

OMF’s Ive said the Reserve Bank’s policy review at the end of the month will be closely watched to see whether governor Graeme Wheeler will hike interest rates early, and next week’s inflation data will be a key report informing that decision.

New Zealand’s December food price index is due for release today.

The momentum in the New Zealand economy has coincided with a slow-down across the Tasman, where the Reserve Bank of Australia has been cutting its key rate, and the kiwi climbed to a new five-year high of 93.71 Australian cents, trading at 93.53 cents at 8am from 92.60 cents yesterday.

Investors’ appetite for higher-yielding, or riskier, assets got a boost from better than expected US consumer spending figures, which helped propel stocks on Wall Street higher, and eroded some of the pessimism sparked by last Friday’s weak December jobs report.

The local currency climbed to 87.20 yen at 8am in Wellington from 86.53 yen yesterday, and was little changed at 61.27 euro cents from 61.25 cents yesterday. It edged lower to 50.95 British pence from 51.08 pence yesterday.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Shocking Dairy Footage: MPI Failing Our Animals And Damaging Our Reputation

Greens “Nathan Guy needs to urgently look into how his ministry is enforcing animal welfare standards, how these appalling incidents happened under its watch and what it’s going to do prevent similar incidents happening again in the future." More>>


Land & Water Forum: Fourth Report On Water Management

The Land and Water Forum (LWF) today published its fourth report, outlining 60 new consensus recommendations for how New Zealand should improve its management of fresh water and calling on the Government to urgently adopt all of its recommendations from earlier reports. More>>



Welcome Home: Record High Migration Stokes 41-Year High Population Growth

New Zealand annual net migration hit a new high in October as more people arrived from than departed for Australia for the first time in more than 20 years. More>>


Citizens' Advice Bureau: Report Shows Desperate Housing Situation Throughout NZ

CAB's in-depth analysis of over 2000 client enquiries about emergency accommodation shows vulnerable families, pregnant women and children living in cars and garages, even after seeking assistance from the Ministry of Social Development and Housing New Zealand. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news