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

 


NZ dollar falls to month-low after RBNZ keeps rates on hold

NZ dollar falls to month-low as investors reduce their holdings following RBNZ’s ‘on hold’ decision

By Tina Morrison

Jan 31 (BusinessDesk) – The New Zealand dollar fell to a month-low as investors who had been holding the currency in anticipation the central bank may have hiked rates yesterday reduced their reserves.

The kiwi touched 81.22 US cents this morning, its lowest since Dec. 30. The local currency was trading at 81.41 cents at 8am in Wellington, from 81.78 cents at 5pm yesterday. The trade-weighted index slipped to 77.19 from 77.44 yesterday.

New Zealand’s Reserve Bank yesterday kept the benchmark interest rate at an historic low 2.5 percent in a move anticipated by most economists. Still, traders had priced in about a 35 percent chance of a hike and many investors had refrained from selling down their holdings during turmoil in emerging markets in case they missed out on the benefit of a hike.

“The markets held off applying a risk discount to the New Zealand dollar because of the prospect that the RBNZ was going to increase the yield,” said Sam Tuck, senior FX strategist at ANZ New Zealand. “With the RBNZ on hold until March when they are going to hike rates, and that is fully priced anyway, that freed up the market to apply a risk discount to the kiwi.”

The New Zealand dollar touched 92.56 Australian cents this morning, its lowest in more than two weeks, and was at 92.70 cents at 8am in Wellington, from 93.60 cents yesterday.

“People have been selling kiwi-Aussie and buying Aussie-kiwi suggesting either the risk discount is going to come out of Aussie a bit as the emerging markets settle or the risk discount in kiwi needs to be applied if the emerging markets don’t settle,” said ANZ’s Tuck. “That selling pressure in kiwi-Aussie has forced kiwi-US down as well.”

Today, traders will be looking for further detail on the Reserve Bank’s decision not to hike when governor Graeme Wheeler speaks to the Canterbury Employers Chamber of Commerce at 1pm.

New Zealand’s trade balance for December is scheduled for release at 10:45am. Expectations for a $500 million surplus may arrest the kiwi’s decline, ANZ said.

The kiwi was little changed at 83.63 yen from 83.67 yen yesterday, at 60.08 euro cents from 59.91 cents and unchanged at 49.39 British pence.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

China Shopping: NZ-China FTA Upgrade Agreed Among Slew Of New Deals

New Zealand Prime Minister Bill English and China Premier Li Keqiang signed off a series of cooperation deals spanning trade, customs, travel and climate change and confirmed commencement of official talks on an upgrade to the nine-year old free-trade agreement between the two countries. More>>

ALSO:


Media: TVNZ Flags Job Cuts To Arrest Profit Decline

Chief executive Kevin Kenrick said the changes were aimed at creating "a sustainable future video content business for TVNZ in an ever-changing media market." More>>

ALSO:

Reserve Bank: Wheeler Keeps OCR At 1.75%

Reserve Bank governor Graeme Wheeler kept the official cash rate unchanged at 1.75 percent, as expected, and reiterated his view that the benchmark rate doesn't need shifting for the foreseeable future. More>>

ALSO:

Trade Plans: Prime Minister's Speech To International Business Forum

"The work to improve public services, build infrastructure, and solve social problems is possible only because we have enjoyed sustained, solid economic growth. A big reason for that is the Government’s consistent agenda of economic reform, and our determination to open up more opportunities for trade with the world." More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news