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


NZ dollar rises after RB review announced

NZ dollar rises after Finance Minister says it won't be included in RBNZ overhaul

By Rebecca Howard

Nov. 7 (BusinessDesk) - The New Zealand dollar rose against the greenback after Finance Minister Grant Robertson indicated no plans to include the currency in the central bank's revised mandate and signalled no changes until March next year.

The kiwi traded at 69.32 US cents as at 5pm versus 69.25 cents as at 8:30am in Wellington from 68.92 cents late yesterday. The trade-weighted index gained to 73.52 from 73.22.

The kiwi lifted overnight after crude oil gained to a two-year high and found further support when Robertson and acting Reserve Bank of New Zealand governor Grant Spencer re-signed the existing Policy Targets Agreement and Robertson said a two-phase review is planned that will give the Reserve Bank a dual mandate of employment and inflation and will also introduce a committee-making decision model in the initial phase.

The second phase will be carried out in consultation with an independent advisory panel and Robertson said the dollar wouldn't be included.

"We believe that this comment was the reason for the positive market reaction to the news. The NZD rose 0.7 percent, presumably as markets were able to rule out actions specifically designed to lower the exchange rate," said Westpac Banking Corp chief economist Dominick Stephens.

Tim Kelleher, head of institutional foreign exchange sales at ASB Bank, agreed. "The market was a little bit short going into the talk about the PTA review today and then popped afterwards when the Kiwi wasn't mentioned," he said.

The kiwi got slight lift against the Australian dollar when the Reserve Bank of Australia left its benchmark interest rate steady at a policy meeting as inflation remains tepid. "I think it will be a slightly more exciting RBNZ on Thursday," said Kelleher, although he expects Spencer to "maintain the party line." It was trading at 90.14 Australian cents from 89.97 Australian cents late yesterday.

Economists are expecting the RBNZ to keep rates on hold at record low 1.75 percent and issue a cautious statement, however, there is some risk it could be more hawkish in its forecasts given the sharply weaker New Zealand dollar, emerging signs of inflation and the new government's fiscal policy, which will also generate inflation.

"We may also see some inflation from this oil shock," said Kelleher, referring to concern about instability in the Middle East after Saudi Crown Prince Mohammed bin Salman extended a crackdown on corruption that has seen members of the royal family, ministers and business leaders detained - a purge seen by some as a move to cement his power over the oil-rich kingdom.

Kelleher said markets will also be watching for the overnight GlobalDairyTrade auction which is expected to be weak, with the futures pointing to a 2 percent drop.

The kiwi rose to 4.5915 yuan from 4.5694 yuan and traded at 52.60 British pence from 52.69 pence and gained to 59.70 euro cents from 59.32 cents. It rose to 78.97 yen from 78.79 yen.

New Zealand's two-year swap rate rose 3 basis point to 2.19 percent and 10-year swaps rose 4 basis point to 3.13 percent.


© Scoop Media

Business Headlines | Sci-Tech Headlines


57 Million Users' Data: Uber Breach "Utterly Preventatable"

Cybersecurity leader Centrify says the Uber data breach of 57 million customer and driver records - which the ride-hailing company hid for more than a year - was “utterly preventable”. More>>

Scoop 3.0: How You Can Help Scoop’s Evolution

We have big plans for 2018 as we look to expand our public interest journalism coverage, upgrade our publishing infrastructure and offer even more valuable business tools to commercial users of Scoop. More>>

Having A Cow? Dairy Product Prices Slide For Fourth Straight Auction

Dairy product prices fell at the Global Dairy Trade auction, retreating for the fourth straight auction amid signs of increased production... Whole milk powder fell 2.7 percent to US$2,778 a tonne. More>>


Statistics: Butter At Record $5.67/Block; High Vegetable Prices

Rising dairy prices have pushed food prices up 2.7 percent in the year to October 2017, Stats NZ said today. This followed a 3.0 percent increase in the year to September 2017. More>>


Science: New Research Finds Herbicides Cause Antibiotic Resistance

New University of Canterbury research confirms that the active ingredients of the commonly used herbicides, RoundUp, Kamba and 2,4-D (glyphosate, dicamba and 2,4-D, respectively), each alone cause antibiotic resistance at concentrations well below label application rates. More>>


CO2 And Water: Fonterra (And Dairy NZ)'s Environment Plans

Federated Farmers support Fonterra’s bold push to get to zero emissions of CO2 on the manufacturing side of the Co-operative, both in New Zealand and across its global network. More>>