NZ dollar still buoyed by RBNZ governor Orr's comments, hovering around 63 US cents
By Rebecca Howard
Sept. 27 (BusinessDesk) - The New Zealand dollar continues to hover around 63 US cents after the central bank governor said unconventional monetary policy was unlikely, although the currency's gains were capped by US dollar strength.
The kiwi was trading at 63 cents at 8:10am in Wellington from 63.06 at 5pm yesterday. The trade-weighted index was at 70.38 from 70.37.
Reserve Bank governor Adrian Orr yesterday "was talking down the prospects of unconventional monetary policy" and said the New Zealand economy might do better "if monetary and fiscal stimulus held hands," said Kiwibank FX trader Mike Shirley. The kiwi touched an overnight high of 63.27 US cents.
Earlier this week, the Reserve Bank kept the official cash rate at 1 percent as expected but was slightly less dovish than markets had anticipated. According to the central bank, new information since the August monetary policy statement did not warrant a significant change to the outlook and "there remains scope for more fiscal and monetary stimulus, if necessary, to support the economy and maintain our inflation and employment objectives."
US data, however, helped shore up the greenback, which saw the kiwi pare some of its gains. The US economy expanded 2 percent in the second quarter, in line with the previous estimate, as strong consumer spending offset weak exports.
Looking ahead, ANZ Bank economist Michael Callaghan said the ANZ-Roy Morgan Consumer Confidence will be a focus for the kiwi early today as investors look to gauge whether the central bank's 50 basis point rate cut in August is fuelling some consumption.
The New Zealand dollar was at 93.29 Australian cents from 93.21, at 51.11 British pence from 50.97, at 57.66 euro cents from 57.51, at 67.93 yen from 67.89, and at 4.4912 Chinese Yuan from 4.4910.