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

 

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Scoop Business: Productivity Commission To Look At Housing Land Supply

The Productivity Commission is to expand on its housing affordability report with an investigation into improving land supply and development capacity, particularly in areas with strong population growth. More>>

ALSO:

Forestry: Man Charged After 2013 Death

Levin Police have arrested and charged a man with manslaughter in relation to the death of Lincoln Kidd who was killed during a tree felling operation on 19 December 2013. More>>

ALSO:

Smells Like Justice: Dairy Company Fined Over Odour

Dairy company fined over odour Dairy supply company Open Country Dairy Limited has been convicted and fined more than $35,000 for discharging objectionable odour from its Waharoa factory at the time of last year’s ”spring flush” when milk supply was high. More>>

Scoop Business: Dairy Product Prices Decline To Lowest Since July 2012

Dairy product prices dropped to the lowest level since July 2012 in the latest GlobalDairyTrade auction, led by a slump in rennet casein and butter milk powder. More>>

ALSO:

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news