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

 

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:

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:

Retail: Pumpkin Patch Brand, IP Sold To Catch Group

The receivers of failed children's clothing retailer Pumpkin Patch have confirmed that the company's brand and intellectual property have been sold to Australian online retailer Catch Group. More>>

ALSO:

Oil: 2017 Block Offer Petroleum Tender Launched

New Zealand is well-placed to take advantage of the economic benefits of oil and gas exploration, Energy and Resources Minister Judith Collins announced today at the launch of the 2017 Block Offer petroleum tender. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news