XE Data Update - RBNZ Financial Stability Report

The RBNZ has just released its Financial Stability Report.

The key points in report are:

RBNZ says elevated financial vulnerabilities warrant more effort to ensure the system remains resilient over the longer-term

Decides to leave LVR (loan-to-value ratio) restrictions at current level
Strong bank capital buffers are key to enabling banks to absorb losses

Recent reviews of banks and life insurers, number of breaches reinforces need to institutions to improve behaviour

Will be taking a more intensive approach, which will involve greater scrutiny of institutions’ compliance

Some life insurers have low solvency buffers over minimum requirements

Need for insurers to maintain strong buffers, and insurer solvency requirements to be reviewed.

Risk of large housing losses has reduced somewhat over the past 3 years

Significant share of the dairy sector remains financially vulnerable

A negative OCR (official cash rate) is not currently a central scenario in our published forecasts

Considering the potential impacts of unconventional monetary policy tools on bank profitability

The NZD is little changed in immediate response.

Current indicative levels are:

NZD-USD 0.6415 / 0.6440
NZD-AUD 0.9455 / 0.9480
NZD-EUR 0.5820 / 0.5845
NZD-GBP 0.4985 / 0.5010
NZD-JPY 69.95 / 70.20

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