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.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Shocking Dairy Footage: MPI Failing Our Animals And Damaging Our Reputation

Greens “Nathan Guy needs to urgently look into how his ministry is enforcing animal welfare standards, how these appalling incidents happened under its watch and what it’s going to do prevent similar incidents happening again in the future." More>>


Land & Water Forum: Fourth Report On Water Management

The Land and Water Forum (LWF) today published its fourth report, outlining 60 new consensus recommendations for how New Zealand should improve its management of fresh water and calling on the Government to urgently adopt all of its recommendations from earlier reports. More>>



Welcome Home: Record High Migration Stokes 41-Year High Population Growth

New Zealand annual net migration hit a new high in October as more people arrived from than departed for Australia for the first time in more than 20 years. More>>


Citizens' Advice Bureau: Report Shows Desperate Housing Situation Throughout NZ

CAB's in-depth analysis of over 2000 client enquiries about emergency accommodation shows vulnerable families, pregnant women and children living in cars and garages, even after seeking assistance from the Ministry of Social Development and Housing New Zealand. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news