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

 


NZ dollar trades below 87 US cts as rate hike bets slow

NZ dollar trades below 87 US cts amid speculation on slower pace of rate hikes

By Jonathan Underhill

July 17 (BusinessDesk) - The New Zealand dollar fell to its lowest level in three weeks amid speculation the Reserve Bank may use its interest rate review next week to signal a slower pace of rate hikes, tarnishing the appeal of the currency’s high yield.

The kiwi traded at 86.93 US cents at 5pm in Wellington, having earlier fallen as low as 86.83 cents, from 86.98 cents late yesterday. The trade-weighted index fell to 80.96 from 81.04.

Most economists still expect Reserve Bank governor Graeme Wheeler to raise the official cash rate a quarter-point to 3.5 percent on July 24 but he may tweak the wording of what is typically a one-page statement at the six-weekly review to indicate he won’t rush to raise the OCR again. Weaker dairy prices threaten to slow the pace of the New Zealand economy, where inflation has remained relatively benign.

“The economy is still growing above potential and rates will need to go higher,” said Robin Clements, economist at UBS New Zealand. “But do they go at every opportunity? Maybe not.”

Swap rates dropped yesterday as the market adjusted its bets on the track of interest rates following figures that showed non-tradable inflation was almost half the pace the central bank was expecting in the second quarter. Adding to that, dairy prices fell to the lowest level since December 2012 in this week’s GlobalDairyTrade auction and have slumped by about one third this year.

AMP Capital New Zealand, which manages more than $18 billion of assets, said at its quarterly briefing in Wellington today that it was underweight the New Zealand dollar even while holding more cash than the size of its portfolios would suggest.

“We have got an increasingly unjustified strong currency, especially after the most recent decline in commodity prices,” AMP Capital chief economist Bevan Graham said. “The currency is so high, fundamentals have turned against it, it’s just a matter of time before we see some downside.”

The kiwi increased to 64.25 euro cents from 64.14 euro cents late yesterday and traded at 50.70 British pence from 50.83 pence. It fell to 88.20 yen from 88.49 yen and dropped to 92.78 Australian cents from 93.13 cents.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Sky City : Auckland Convention Centre Cost Jumps By A Fifth

SkyCity Entertainment Group, the casino and hotel operator, is in talks with the government on how to fund the increased cost of as much as $130 million to build an international convention centre in downtown Auckland, with further gambling concessions ruled out. The Auckland-based company has increased its estimate to build the centre to between $470 million and $530 million as the construction boom across the country drives up building costs and design changes add to the bill.
More>>

ALSO:

RMTU: Mediation Between Lyttelton Port And Union Fails

The Rail and Maritime Union (RMTU) has opted to continue its overtime ban indefinitely after mediation with the Lyttelton Port of Christchurch (LPC) failed to progress collective bargaining. More>>

Earlier:

Science Policy: Callaghan, NSC Funding Knocked In Submissions

Callaghan Innovation, which was last year allocated a budget of $566 million over four years to dish out research and development grants, and the National Science Challenges attracted criticism in submissions on the government’s draft national statement of science investment, with science funding largely seen as too fragmented. More>>

ALSO:

Scoop Business: Spark, Voda And Telstra To Lay New Trans-Tasman Cable

Spark New Zealand and Vodafone, New Zealand’s two dominant telecommunications providers, in partnership with Australian provider Telstra, will spend US$70 million building a trans-Tasman submarine cable to bolster broadband traffic between the neighbouring countries and the rest of the world. More>>

ALSO:

More:

Statistics: Current Account Deficit Widens

New Zealand's annual current account deficit was $6.1 billion (2.6 percent of GDP) for the year ended September 2014. This compares with a deficit of $5.8 billion (2.5 percent of GDP) for the year ended June 2014. More>>

ALSO:

Still In The Red: NZ Govt Shunts Out Surplus To 2016

The New Zealand government has pushed out its targeted return to surplus for a year as falling dairy prices and a low inflation environment has kept a lid on its rising tax take, but is still dangling a possible tax cut in 2017, the next election year and promising to try and achieve the surplus pledge on which it campaigned for election in September. More>>

ALSO:

Job Insecurity: Time For Jobs That Count In The Meat Industry

“Meat Workers face it all”, says Graham Cooke, Meat Workers Union National Secretary. “Seasonal work, dangerous jobs, casual and zero hours contracts, and increasing pressure on workers to join non-union individual agreements. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

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