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

 


NZ TWI rises to post-float record, keeping RBNZ wary

NZ TWI rises to post-float record, raising chances RBNZ’s Wheeler will talk down the kiwi tomorrow

By Tina Morrison

March 12 (BusinessDesk) – The trade-weighted index, which measures the New Zealand dollar relative to the currencies of major trading partners, rose to a post-float record, prompting speculation Reserve Bank governor Graeme Wheeler will try to talk down its value when he announces an interest rate hike tomorrow.

The trade-weighted index jumped as high as 79.68 overnight, up from 79.50 yesterday and surpassing its previous high of 79.67 in April last year. It recently traded at 79.44. The New Zealand dollar slipped to 84.61 US cents at 8am in Wellington from 84.80 cents at 5pm yesterday.

The kiwi has held at elevated levels ahead of the Reserve Bank meeting tomorrow where interest rates are set to start rising on concern a strengthening economy will push up inflation. In recent days, the local currency has gained against its Australian counterpart amid concern Chinese growth and further bond defaults in China weigh on the Aussie.

A higher local currency will concern New Zealand’s central bank because it makes the nation’s exports less competitive. In its December forecast, the Reserve Bank projected the TWI would average 77.4 in the March quarter.

“There will be some effort to try and talk it down,” said Stuart Ive, senior adviser at OMF. “It will certainly be high on their list of concerns, without a doubt, you have an exceptionally elevated currency. It’s almost impossible that they will not mention it.”

In its December forecast track for the 90-day bank bill rate, seen as a proxy for the OCR, the Reserve Bank projected the rate would increase to 2.7 percent in the March quarter of 2014, rising to 3.8 percent by the end of the year, and 4.8 percent by March 2016.

“At the moment the market is expecting (interest rate hikes) mainly in quick succession at the front end of the curve,” said OMF’s Ive. “The RBNZ may turn around and say because there are so many uncertainties in the world that it’s going to be a very gradual pace, or slower pace, spread over the year.”

The central bank’s ability to weaken the currency is limited and the current elevated level isn’t sustainable over the long term, Ive said.

The New Zealand dollar touched a six-week high of 94.39 Australian cents this morning, and was trading at 94.32 cents at 8am from 93.94 cents at 5pm yesterday. In Australia today, traders will be eyeing the Westpac consumer sentiment survey for March and a report on January home loans.

Australian Reserve Bank deputy governor Philip Lowe is speaking tonight in Sydney on demographics, productivity and innovation, in a session open to media questions.

The local currency slipped to 61 euro cents from 61.14 cents yesterday, dropped to 50.88 British pence from 50.95 pence and declined to 87.06 yen from 87.57 yen.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Hager Raid: Westpac Wrong To Release Bank Records To Police

The Privacy Commissioner has censured Westpac Banking Corp for releasing without a court order more than 10 months of bank records belonging to the political activist and journalist Nicky Hager during a police investigation into leaked information published in Hager's 2014 pre-election book, 'Dirty Politics'. More>>

ALSO:

EARLIER:

Crown Accounts: Government Ekes Out Six-Month Surplus Of $9M

The New Zealand government eked out a tiny surplus in the first six months of the fiscal year as growth in domestic consumption lifted the goods and services tax take, while uncertainties over the Kaikoura earthquake costs meant expenses were less than expected. More>>

ALSO:

Almost 400 Jobs: Shock At Cadbury's Dunedin Factory Closure

Workers at Cadbury in Dunedin are reeling after learning this morning that the iconic Cadbury factory is to close, with the loss of almost 400 jobs... “The company had reported it was doing well and this has come out of the blue,” says Chas. More>>

ALSO:

Transport: Boards Of Inquiry For Auckland Roading Projects

Boards of Inquiry have been appointed to decide on two significant Auckland roading projects in a move which will get a decision by the end of the year, Environment Minister Dr Nick Smith and Conservation Minister Maggie Barry announced today. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news