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

 


NZ dollar rises after RBNZ hikes rates, signals more to come

NZ dollar rises to 5-month high after RBNZ hikes rates, signals more to come

By Tina Morrison and Suze Metherell

March 13 (BusinessDesk) – The New Zealand dollar jumped to a five-month high after the Reserve Bank raised the benchmark interest rate as expected and signalled further hikes are on the way.

The kiwi rose as high as 85.26 US cents, from 84.73 cents immediately before the Reserve Bank’s 9am statement. The local currency recently traded at 85.20 cents.

Reserve Bank governor Graeme Wheeler lifted the official cash rate a quarter-point to 2.75 percent in the first move of a tightening cycle, and signalled the potential for a steeper track of future hikes as he tries to prevent inflation accelerating. The central bank expects the official cash rate will need to rise by about 2 percentage points over the next two years.

“The RBNZ is pretty determined to begin the process of normalising rates, so there’s no surprise that they’ve hiked the official cash rate and the outlook is more hikes over the next couple of years,” said ASB economist Chris Tennent-Brown. “At this stage we’re going to consider every RBNZ meeting in the future live. We’d expect them to deliver a follow up hike in April.”

Governor Wheeler told a press conference following the statement that the bank’s track for the 90-day bank bill rate implied 100 to 125 basis points of interest rate hikes this year.

The central bank said the New Zealand dollar will stay at an elevated level for longer than previously thought "depreciating only gradually," as the local economic story finds favour with foreign investors.

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. 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 rose as high as 79.87, a new post-float high, and was recently at 79.76.

Governor Wheeler said today the high exchange rate is a headwind to the tradable sector and the bank doesn't "believe the current level of the exchange rate is sustainable in the long run."

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Tourism: China Southern Airlines To Fly To Christchurch

China Southern Airlines, in partnership with Christchurch Airport and the South Island tourism industry, has announced today it will begin flying directly between Guangzhou, Mainland China and the South Island. More>>

ALSO:

Dodgy: Truck Shops Come Under Scrutiny

Mobile traders, or truck shops, target poorer communities, particularly in Auckland, with non-compliant contracts, steep prices and often lower-quality goods than can be bought at ordinary shops, a Commerce Commission investigation has found. More>>

ALSO:

Auckland Transport: Government, Council Agree On Funding Approach

The government and Auckland Council have reached a detente over transport funding, establishing a one-year, collaborative timetable for decisions on funding for the city's transport infrastructure growth in the next 30 years after the government refused to fund the $2 billion of short and medium-term plans outlined in Auckland's draft Unitary Plan. More>>

ALSO:

Bullish On China Shock: Slumping Equities, Commodities May Continue, But Not A GFC

The biggest selloff in stock markets in at least four years, slumping commodity prices and a surge in Wall Street's fear gauge don't mean the world economy is heading for another global financial crisis, fund managers say. More>>

ALSO:

Real Estate: Investors Driving Up Auckland Housing Risk - RBNZ

The growing presence of investors in Auckland's property market is increasing the risks, and is likely to both amplify the housing cycle and worsen the potential damage from a downturn both to the financial system and the broader economy, said Reserve Bank deputy governor Grant Spencer. More>>

ALSO:

Annual Record: Overseas Visitors Hit 3 Million Milestone

Visitor arrivals to New Zealand surpassed 3 million for the first time in the July 2015 year, Statistics New Zealand said today. The record-breaking 3,002,982 visitors this year was 7 percent higher than the July 2014 year. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news