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

 


RBNZ sees stronger kiwi dollar for longer

RBNZ sees stronger kiwi dollar for longer

By Paul McBeth

March 13 (BusinessDesk) - The New Zealand dollar will stay at an elevated level for longer than previously thought as the local economic story finds favour with foreign investors, according to the Reserve Bank.

The trade-weighted index, a measure of the kiwi against a basket of five currencies, averaged 78.18 in the March quarter, ahead of the Reserve Bank’s December projection of 77.4 in the period, as the prospect of rising interest rates and accelerating economic momentum fuel demand for the New Zealand dollar.

The bank now anticipates the currency will remain elevated over its projection through to March 2017, “depreciating only gradually,” according to today’s monetary policy statement. The bank sees the TWI averaging 78.4 in the current March quarter, falling to 78 next year and 76.6 in March 2015. The TWI was at 79.61 following the statement.

“Investors have recognised the positives for New Zealand’s outlook in the forms of the high terms of trade and domestic growth momentum,” the MPS said. “The consequent expectation of rising interest rate differentials has been priced into the yield curve … which is also reflected in the current level of the exchange rate.”

Governor Graeme Wheeler has tried to talk down the currency, calling it a headwind on the tradable sector, and today said the bank doesn’t “believe the current level of the exchange rate is sustainable in the long run.”

Revisions to the way gross domestic product is measured showed higher terms of trade and net export volumes than previously thought, which explains some of the persistent strength in the kiwi dollar, though the “high exchange rate is expected to remain a drag on economic output over the projection,” the bank said.

While the strong currency eats into export earnings, it also keeps down the price of imports, and the bank expects tradable inflation to remain negative for much of its projected period through to March 2017.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Research: ‘Ageing Well’ Science Challenge Launched

Science and Innovation Minister Steven Joyce today launched the Ageing Well National Science Challenge, confirming initial funding of $14.6 million. More>>

ALSO:

Scoop Business: Govt Resisting Pressure To Pump More Cash Into Solid Energy

Prime Minister John Key says it is “not the government’s preferred option” to make a fresh capital injection into the troubled state-owned coal miner, Solid Energy, but dodged journalists’ questions at his weekly press conference on whether that might prove necessary... More>>

ALSO:

Lagest Ever Privacy Breach Award: NZCU Baywide Accepts “Severe” Censure In Cake Case

NZCU Baywide says that once it was found to have committed a breach of a former staff member’s privacy, it had attempted to resolve the matter... the censure and remedies for its actions taken almost three years ago are “severe” but accepted, and will hopefully draw a line under the matter. More>>

ALSO:

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news