NZ dollar gains as RBNZ lifts rates, sees faster economic growth
By Paul McBeth
April 24 (BusinessDesk) - The New Zealand dollar gained against other currencies after Reserve Bank governor Graeme Wheeler raised the official cash rate as expected, while lifting his estimate for economic growth in the March year to 3.5 percent.
The kiwi rose to 86.24 US cents at 5pm in Wellington from 85.92 cents at 8am and 85.94 cents yesterday. The trade-weighted index advanced to 80.21 from 79.99.
Wheeler hiked the OCR a quarter-point to 3 percent, his second 25 basis points increase in as many months, as he looks to head off inflationary pressures. Noting the strength of the kiwi dollar was unsustainable and holding back tradable inflation, the central bank raised its estimate for gross domestic product growth to 3.5 percent in the year ended March 31 from a previous forecast of 3.3 percent last month.
“If anything, the RBNZ is very happy with the current situation apart from the currency, which there’s very little it can do about. At least they’re not half-heartedly trying to jawbone the currency down when everyone knows it’s going to have a very muted impact,” said Stuart Ive, senior client adviser at OMF in Wellington. “They revised the economy higher regardless of the currency, and the kiwi for now is relatively underpinned.”
New Zealand and Australian markets will be closed on Friday for the Anzac Day public holiday, leaving traders to focus on the German IFO business sentiment survey, and a speech by European Central Bank president Mario Draghi.
The US Federal Open Market Committee policy review meeting, US employment data, and Chinese manufacturing figures will attract attention next week.
The local currency was little changed at 88.21 yen at 5pm in Wellington from 88.15 yen yesterday, and rose to 92.76 Australian cents from 92.59 cents. It increased to 62.38 euro cents from 62.22 cents yesterday, and advanced to 51.36 British pence from 51.07 pence.