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


NZ dollar rises to new 5-year high vs. Aust dollar on RBA

NZ dollar rises to new 5-year high vs. Australian dollar on dovish RBA

By Jonathan Underhill

July 30 (BusinessDesk) – The New Zealand dollar rose to a new five-year high against its Australian counterpart after Reserve Bank of Australia governor Glenn Stevens said there is room both for his currency and interest rates to go lower in the face of subdued domestic demand.

The New Zealand dollar climbed as high as 88.11 Australian cents after Stevens gave his speech titled ‘Economic Policy after the Booms’, from 87.53 cents immediately before and from 87.27 cents the previous day. The kiwi traded at 79.89 US cents from 80.31 US cents at 8am in Wellington and from 80.78 cents a day earlier.

Stevens told the Anika Foundation charity lunch in Sydney that the recent decline in the Australian dollar “seems to make sense from a macroeconomic perspective" and “it would not be a major surprise if a further decline occurred over time."

He also said the central bank has “ammunition” to make a policy response to a weak economy, suggesting he is comfortable cutting interest rates further and potentially adopting unconventional macro-prudential tools. The speech underlines that the Australian economy is in a different stage of its cycle rom New Zealand’s, where the central bank has signalled rates will need to rise, narrowing the gap and yield appeal of the Aussie.

“Clearly the world was surprised at the degree of dovishness, talking down the currency and throwing in there the potential to ease rates a lot further,” said Imre Speizer, senior currency strategist at Westpac Banking Corp.

“The Australian economy isn’t going into recession or anything like that – they are just coming off a high,” Speizer said. “They’re hoping the domestic economy takes the place of the winding-down resources sector and they’re in a little bit of a transitional zone.”

Speizer said he has revised up his target for the kiwi against the Australian dollar to 91 Australian cents ahead of his bank’s official upgrade.

Helping to illustrate the difference in the two economies, New Zealand economic figures showed new home building consents were at a five-year high in the second quarter, though the growth was mainly driven by a surge in April, with consents falling in June.

The kiwi traded at 78.55 yen from 78.52 yen this morning and 79.02 yen the previous day and fell to 60.29 euro cents from 60.83 euro cents yesterday. It dropped to 52.13 British pence from 52.51 pence. The trade-weighted index fell to 75.55 from 75.93.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Commerce Commission: Appeals Record $2.25m Fine In Vodafone FibreX Case

The Commerce Commission has filed an appeal in the High Court against a record $2.25 million fine imposed on Vodafone NZ Limited (Vodafone) for its offending under the Fair Trading Act during its FibreX advertising campaign. While the sentence imposed in the Auckland District Court on April 14 was the largest-ever fine under the Fair Trading Act, the Commission will argue that it is manifestly inadequate... More>>

All District Health Boards: Historic Pay Equity Settlement

An historic agreement has been ratified that addresses a long-standing undervaluation of a workforce that is critical to the smooth running of our hospitals and the delivery of healthcare... More>>

MPI: Dry Autumn In Waikato And South Auckland Leads To Drought Classification Drought conditions affecting the primary sector in the Waikato and South Auckland were today classified as a medium-scale adverse event, enabling a package of support for farmers and growers... More>>

Barfoot & Thompson: Rents Up By Around 3% In Most Areas

The average weekly rent paid for homes in most areas of Auckland has risen by around 3 percent year-on-year. The figures for end March from more than 16,000 properties... More>>

DoC: Smeagol The ‘Gravel Maggot’ Leaves Its Rare Mark On The Remote West Coast
An extremely rare species of sea slug or ‘gravel maggot’ has been detected for the first time on a remote beach in South Westland... More>>

Immigration: Annual Net Migration Loss Of 7,300

The provisional net loss of 7,300 people in the year ended March 2022 was the lowest net migration for a March year since 2012, Stats NZ said today... More>>