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

 

Budget Policy Statement: Spending Wins Over Tax Cuts; Big Ticket Items Get Boost

Income tax cuts are on hold as the government says “responding to the earthquakes and reducing debt are currently of higher priority”, although election year tax sweeteners remain possible. More>>

ALSO:

Fishy: Is Whitebaiting Sustainable?

The whitebait fry - considered a delicacy by many - are the juveniles of five species of galaxiid, four of which are considered threatened or declining. The SMC asked freshwater experts for their views on the sustainability of the whitebait fishery and whether we're doing enough to monitor the five species of galaxiid that make up whitebait. More>>

ALSO:

Crown Accounts: Smaller-Than-Expected Four-Month Deficit

The New Zealand government's accounts recorded a smaller-than-forecast deficit in the first four months of the fiscal year on a higher-than-expected inflow of corporate and goods and services tax. More>>

ALSO:

On For Christmas: KiwiRail Ferries Back In Full Operation After Quake

KiwiRail’s Interislander ferries are back in full operation for the first time since the Kaikoura earthquake, with the railspan that allows rail wagons to be loaded on the Aratere now restored. More>>

ALSO:

Comerce Commission Investigation: Prosecutions Over Steel Mesh Labelling

Steel & Tube Holdings, along with two other companies, will be prosecuted by the Commerce Commission following the regulator's investigation into seismic steel mesh, while Fletcher Building's steel division has been given a warning. More>>

ALSO:

Wine: 20% Of Marlborough Storage Tanks Damaged By Quake

An estimated 20 percent of wine storage tanks in the Marlborough region, the country’s largest wine producing area, have been damaged by the impact of the recent Kaikoura earthquake. More>>

ALSO:

ACC: Levy Recommendations For 2017 – 2019 Period

• For car owners, a 13% reduction in the average Motor Vehicle levy • For businesses, a 10% reduction in the average Work levy, and changes to workplace safety incentive products • For employees, due to an increase in claims volumes and costs, a 3% increase in the Earners’ levy. More>>

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news