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

 


NZ dollar falls after RBNZ says kiwi strength 'unjustified'

NZ dollar falls after RBNZ says kiwi's strength 'unjustified', stoking intervention talk

By Tina Morrison

July 24 (BusinessDesk) - The New Zealand dollar shed almost one cent against the US dollar to a six-week low after Reserve Bank governor Graeme Wheeler said the currency's strength was "unjustified", invoking one of the central bank's criteria to intervene in the foreign exchange market.

The kiwi fell as low as 86.05 US cents, from 87.02 cents immediately before the central bank's 9am statement. It was recently trading at 86.21 US cents. The trade-weighted index, fell to 80.29 from 80.97 immediately before the statement.

Governor Wheeler today raised the official cash rate as expected for a fourth consecutive meeting to 3.5 percent in an attempt to slow inflation in an expanding economy driven by the rebuilding of earthquake damaged Christchurch, a strong housing market, elevated commodity prices and increased migration. Wheeler said today the speed and extent of further OCR increases will depending on the assessment of the rate rises and the implications of future economic and financial data for inflationary pressures.

Wheeler's comments were "slightly more dovish" than expected, said Westpac Banking Corp. senior market strategist Imre Speizer. The signal for a pause in interest rate hikes "was probably worth a little bit of fall in the kiwi," Speizer said. "The rest of the fall in the kiwi was driven by the strong language around the high currency. It was stronger language than we expected and it could be interpreted by some as a veiled intervention threat."

The Reserve Bank's intervention policy includes a requirement that the currency must be "unjustified" based on a range of economic fundamentals, and must be at an exceptionally high or exceptionally low point in the cycle.

The New Zealand dollar will probably continue its slide today below 86 US cents and may head towards 85.50 cents in the days ahead, Speizer said.

In his one-page statement today, Wheeler noted the decline in export prices for dairy products and timber, saying that "would reduce primary sector incomes over the coming year".

"With the exchange rate yet to adjust to weakening commodity prices, the level of the New Zealand dollar is unjustified and unsustainable and there is potential for a significant fall," Wheeler said.

Later this morning, Statistics New Zealand publishes the country's trade balance for June which is expected to show weaker export receipts.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

OceanaGold: Man Killed In Waihi Mine Accident

A 29-year-old man had died following a work place accident at OceanaGold mine, Waihi last night. The man was killed after the front end loader he was in rolled down a slope. The accident happened at approximately 6.30pm on Thursday night. More>>

ALSO:

Constructing Consent: Annual Housing Consents Highest In Over A Decade

More than 29,000 new homes gained building consent in the year to June 2016, up 16 percent from the previous June year, Statistics New Zealand said today. More>>

ALSO:

War Against Weevil For Future Peas: “No Peas, No Weevil” Ban Now In Place In Wairarapa

The Ministry for Primary Industries (MPI) has today placed a ban on growing peas within a specified area and placed controls on moving pea material (seed and untreated pea straw) within, in and out of this area for the next 2 years. More>>

ALSO:

Wood Producers: Crisis In New Zealand Log Supply

New Zealand wood processing leaders held a hui with senior government officials and political leaders in Whangarei yesterday to assess the acute log supply shortage to local mills in Northland. More>>

Consents And Taxes: Trustpower 'Very Disappointed' With Judgement

Trustpower is "very disappointed" with a Supreme Court ruling dismissing its bid to claim tax deductions on $17.7 million of project costs in a case closely watched by large-scale infrastructure developers. More>>

ALSO:

Fruitful Endeavours: Kiwifruit Exports Reach Record Levels

In June 2016, kiwifruit exports rose $105 million (47 percent) from June 2015 to reach $331 million, Statistics New Zealand said today. Overall, goods exports rose $109 million (2.6 percent) in June 2016 (to $4.3 billion). More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news