Currency talk: Kiwi continues its climb
The kiwi dollar has continued to push higher against both the US and the Aussie dollars following the Reserve Bank keeping interest rates on hold last week.
Governor Graeme Wheeler opted to keep New Zealand’s official cash rate (OCR) on hold at 2.25%, as expected and indicated another cut/cuts were on the way, also as expected.
But the jump in the kiwi looks to have been caused by the “upbeat tone” of Mr Wheeler’s statement.
Westpac senior economist Michael Gordon told NBR Radio last week the tone of the statement suggests the Reserve Bank could be thinking about ending its easing cycle in June.
This scepticism – as well as comments from the US Federal Reserve which left its interest rates on hold last week – pushed the kiwi higher against the greenback.
The New Zealand dollar has also been testing 92c against the Australian dollar. The Aussie was at just under 89c before the Reserve Bank’s announcement but was pushed up after Mr Wheeler kept rates on hold and the Australian consumer price index (CPI) revealed more inflation weakness.
The data showed Australia’s CPI fell 0.2% in the first quarter of this year, with annual inflation slowing to 1.3% growth in the year-to-March 2016.