The New Zealand dollar was little changed ahead of the Reserve Bank's financial stability report tomorrow, which may include some comment on restrictions on low-equity loans having done their job.
The New Zealand dollar was little changed ahead of the Reserve Bank's financial stability report tomorrow, which may include some comment on restrictions on low-equity loans having done their job.
The kiwi traded at 77.49 US cents at 5pm in Wellington, from 77.54 cents at the start of the day and from 77.87 cents yesterday. The trade-weighted index weakened to 76.89 from 77.01 yesterday.
Speculation has swirled that RBNZ governor Graeme Wheeler will signal the end of loan to value ration restriction amid signs some steam may be coming out of the property market. At the central bank's last interest rate review on Oct. 30, Wheeler said house price inflation "has fallen significantly since late 2013," and more recently Finance Minister Bill English has said he wouldn't be surprised if the policy came to an end. Wheeler has previously said the LVR policy was the equivalent of 30-50 basis points of interest rate tightening.
"We think it is unlikely given we're coming into the Spring bloom for the property market but you can't discount it," said Tim Kelleher. head of institutional FX sales at ASB Bank. Possible outcomes include a move to a regional model of restrictions, targeting Auckland and Christchurch, he said. Some traders will be pondering whether ending the LVR policy "is a sign of an easing bias."
The kiwi will probably trade in a range of 76.50 US cents to 78.50 cents in the next 24 hours, he said. Trading may be subdued with the US marking the Veterans Day public holiday on Nov. 11.
The New Zealand dollar fell to 89.10 Australian cents from 89.89 cents and rose to 89.10 yen from 88.95 yen. It was little changed at 48.90 British pence from 48.97 pence yesterday and was unchanged at 62.38 euro cents.
(BusinessDesk)
