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

 


NZ dollar falls after RBNZ keeps rates on hold, Fed move

NZ dollar falls after RBNZ keeps rates on hold, Fed keeps slowing money printing

By Paul McBeth

Jan. 30 (BusinessDesk) - The New Zealand dollar fell after the Reserve Bank kept interest rates unchanged, disappointing some traders hoping for a rise, and after the US Federal Reserve trimmed another US$10 billion from its monthly asset purchase programme, putting emerging markets under more scrutiny.

The kiwi dropped to 81.76 US cents at 5pm in Wellington from 82.38 cents this morning and 82.81 cents yesterday. The trade-weighted index fell as low as 77.36, the lowest since Jan. 3, and was 77.42 at 5pm in Wellington from 78.38 yesterday.

New Zealand’s Reserve Bank governor Graeme Wheeler kept the key rate at 2.5 percent today, while saying interest rates will have to go up soon to head off future inflationary pressures. The market had priced in a 30 percent chance of a hike going into the meeting, leaving some traders disappointed after the review.

“It’s quite clear that the RBNZ was going to err on the side of caution – why raise rates when things are far from crystal clear?” said Stuart Ive, senior client adviser at OMF in Wellington. “Barring a financial market meltdown, the kiwi is a ‘buy on dips’ – sooner or later we will start to normalise policy, which in our case means a start to raise rates.”

The RBNZ meeting came immediately after the Fed reviewed its monetary policy, trimming back its $75 billion monthly quantitative easing to US$65 billion. That reduction of monetary stimulus in the world’s biggest economy has put emerging markets under pressure as they were a key beneficiary of the cheap money, which is now being repatriated to seemingly safer assets.

That fear has led to interest rate hikes by central banks in Turkey and South Africa to shore up steep declines in their respective currencies. Official Chinese government figures today showed manufacturing shrank in January, the first contraction in six months.

New Zealand’s economy showed more signs of strength with government figures showing increased building consent issuance and rising inbound net migration in December. RBNZ’s Wheeler today said he expects annual growth of about 3.5 percent this year.

The New Zealand dollar fell to 83.68 yen at 5pm in Wellington from 85.46 yen and declined to 93.62 Australian cents from 94.06 cents. It dropped to 59.89 euro cents from 60.65 cents yesterday, and decreased to 49.34 British pence from 49.95 pence.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

NASA, NOAA: Find 2014 Warmest Year In Modern Record

Since 1880, Earth’s average surface temperature has warmed by about 1.4 degrees Fahrenheit (0.8 degrees Celsius), a trend that is largely driven by the increase in carbon dioxide and other human emissions into the planet’s atmosphere. The majority of that warming has occurred in the past three decades. More>>

ALSO:

Scoop Business: New Zealand’s Reserve Bank Named Central Bank Of The Year

The Reserve Bank of New Zealand’s efforts to stifle house price inflation by using new policy tools has seen the institution named Central Bank of the year by Central Banking Publications, a publisher specialising in global central banking practice. More>>

ALSO:

Science Media Centre: Viral Science And Another 'Big Dry'?

"Potentially, if there is no significant rainfall for the next month or so, we could be heading into one of the worst nation-wide droughts we’ve seen for some time," warns NIWA principal climate scientist Dr Andrew Tait. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news