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

 


Kiwi falls against Aussie dollar as inflation accelerates

Kiwi falls against Aussie dollar as inflation accelerates across the Ditch

By Paul McBeth

Jan. 22 (BusinessDesk) - The New Zealand dollar fell against its Australian counterpart after accelerating inflation across the Tasman reduced the chance the Reserve Bank of Australia will cut interest rates.

The kiwi fell to 93.81 Australian cents from 94.46 cents immediate before the inflation report and 94.40 cents yesterday. It traded at 83.22 US cents at 5pm in Wellington from 83.09 cents at 8am and 83.21 cents yesterday.

Australian consumer prices rose at an annual pace of 2.7 percent in the December quarter, ahead of market expectations of a 2.5 percent rise. The faster-than-expected pace of inflation saw the Australian dollar gain on the prospect the RBA won’t be able to cut rates again to revive a moribund economy.

Traders are pricing in an increase of 5 basis points to Australia’s 2.5 percent cash rate over the coming 12 months, according to the Overnight Index Swap curve, having priced in a reduction before the release.

“The CPI number capped the chance of a rate cut any time soon, and the kiwi/Aussie took a bit of a dip,” said Alex Hill, head of dealing at HiFX in Auckland. The kiwi has “big support” at 92.80 Australian cents, and will attract “big demand there” if it falls further, he said.

The Australian inflation figures follow yesterday’s local CPI which unexpectedly rose in the December quarter, fuelling expectations the Reserve Bank of New Zealand will hike rates as early as next week. Traders have been pricing in a 46 percent chance of an increase next week

HiFX’s Hill is sceptical Wheeler will lift rates as housing data is showing early signs the central bank’s restrictions on low equity home lending are starting to bite and while the local currency remains high.

The kiwi fell to 86.54 yen at 5pm in Wellington from 87.06 yen yesterday after the Bank of Japan today stuck to its plan to expand its monetary base by an annual 60 trillion to 70 trillion yen.

It slipped to 50.49 British pence from 50.64 pence ahead of UK employment figures which are expected to show a decline in the unemployment rate, and minutes to the Bank of England’s last meeting.

The local currency traded at 61.31 euro cents from 61.42 cents yesterday. The trade-weighted index fell to 78.86 from 79.09.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Interest Rates: Wheeler Hikes OCR To 3% On Inflationary Pressures, Eyes Kiwi

Reserve Bank governor Graeme Wheeler lifted the official cash rate for the second time in as many months, saying non-tradable inflationary pressures were "becoming apparent" in an economy that’s picking up pace and he's watching the impact of a strong kiwi dollar on import prices. More>>

ALSO:

Scoop Business: Equity Crowd Funding Carries Risks, High Failure Rate

Equity crowd funding, which became legal in New Zealand this month, comes with a high risk of failure based on figures showing existing forays into social capital have a success rate of less than 50 percent, one new entrant says. More>>

ALSO:

Scoop Business: NZ Migration Rises To 11-Year High In March

The country gained a seasonally adjusted 3,800 net new migrants in March, the most since February 2003, said Statistics New Zealand. A net 400 people left for Australia in March, down from 600 in February, according to seasonally adjusted figures. More>>

ALSO:

Hugh Pavletich: New Zealand’s Bubble Economy Is Vulnerable

The recent Forbes e-edition article by Jesse Colombo assesses the New Zealand economy “ 12 Reasons Why New Zealand's Economic Bubble Will End In Disaster ”, seems to have created quite a stir, creating extensive media coverage in New Zealand. More>>

ALSO:

Thursday Market Close: Genesis Debut Sparks Energy Rally

New Zealand stock rose after shares in the partially privatised Genesis Energy soared as much as 18 percent in its debut listing on the NZX, buoying other listed energy companies in the process. Meridian Energy, MightyRiverPower, Contact Energy and TrustPower paced gains. More>>

ALSO:

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news