NZ dollar rises after RBNZ maintains stance in latest rates review
By Jonathan Underhill
June 23 (BusinessDesk) - The New Zealand dollar rose as the Reserve Bank's latest review of interest rates kept its language intact, reassuring some market participants who saw a risk that it would paint a weaker picture of the outlook.
The kiwi gained to 72.63 US cents as at 8am in Wellington from 72.52 cents late yesterday. The trade-weighted index rose to 78.42 from 78.25.
Reserve Bank governor Graeme Wheeler kept the benchmark rate unchanged at 1.75 percent and was measured in his comments about the kiwi dollar, even though the TWI has strengthened about 3 percent in the past six weeks and is currently 3.2 percent above the 76 average level it forecast for the second quarter. Wheeler also noted the fiscal stimulus to the economy likely to come from Budget 2017, with its enhanced infrastructure spend.
"Relief the RBNZ did not spring a dovish surprise yesterday has given the NZD a fresh boost but it should be capped by 0.7300 today," Imre Speizer, senior markets strategist at Westpac Banking Corp, said in a note. Speizer has maintained his three-month view that the Federal Reserve's tightening cycle and US fiscal expansion "should eventually reassert upside pressure on US interest rates and the US dollar, pushing NZD/USD below 0.6800 by year end."
The kiwi dollar rose to 96.30 Australian cents from 96 cents late yesterday. The kiwi traded at 57.24 British pence from 57.22 pence and rose to 80.82 yen from 80.55 yen. It rose to 4.9617 yuan from 4.9530 yuan and gained to 65.13 euro cents from 64.91 cents.