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

 

Gongs Got: Canon Media Awards & NZ Radio Awards Happen

Radio NZ: RNZ website The Wireless, which is co-funded by NZ On Air, was named best website, while Toby Manhire and Toby Morris won the best opinion general writing section for their weekly column on rnz.co.nz and Tess McClure won the best junior feature writer section. More>>

ALSO:

Pre-Budget: Debt Focus Risks Losing Opportunity To Stoke Economy

The Treasury is likely to upgrade its forecasts for economic growth in Budget 2016 next week but Finance Minister Bill English has already signalled that more of his focus is on debt repayment than on fiscal stimulus or tax cuts... More>>

ALSO:

Fulton Hogan's Heroes: Managing Director Nick Miller Resigns

Fulton Hogan managing director Nick Miller will leave the privately owned construction company after seven years in charge. The Dunedin-based company has kicked off a search for a replacement, and Miller will stay on at the helm until March next year, or until a successor has been appointed and a transition period completed. More>>

ALSO:

Gordon Campbell: On Electricity, Executions, And Bob Dylan

The Electricity Authority has unveiled the final version of its pricing plan for electricity transmission. This will change the way transmission prices (which comprise about 10% of the average power bill) are computed, and will add hundreds of dollars a year to power bills for many ordinary consumers. More>>

ALSO:

Half Empty: Fonterra NZ, Australia Milk Collection Drops In Season

Fonterra Cooperative Group says milk collection is down in New Zealand and Australia, its two largest markets, in the first 11 months of the season during a period of weak dairy prices. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news