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

 

Consents And Taxes: Trustpower 'very Disappointed' With Judgement

Trustpower is "very disappointed" with a Supreme Court ruling dismissing its bid to claim tax deductions on $17.7 million of project costs in a case closely watched by large-scale infrastructure developers. More>>

ALSO:

Fruitful Endeavours: Kiwifruit Exports Reach Record Levels

In June 2016, kiwifruit exports rose $105 million (47 percent) from June 2015 to reach $331 million, Statistics New Zealand said today. Overall, goods exports rose $109 million (2.6 percent) in June 2016 (to $4.3 billion). More>>

ALSO:

Economic Update: RBNZ Says Rate Cut Seems Likely

The Reserve Bank will likely cut interest rates further as a persistently strong kiwi dollar makes it difficult for the bank to meet its inflation target, it said. The local currency fell. More>>

ALSO:

House Price Action Plan: RBNZ Signals National Lending Restrictions

The central bank wants to cap bank lending to property investors with a deposit of less than 40 percent at 5 percent and restore the 10 percent limit for owner-occupiers wanting to take out a mortgage with a deposit of less than 20 percent, according to a consultation paper released today. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news