close
MENU
1 mins to read

Dollar to stay under pressure until December MPS

Dollar was little changed in local trading.

Paul McBeth
Wed, 26 Nov 2014

The New Zealand dollar was little changed in local trading, and will likely remain under pressure as low inflation expectations and weak dairy prices keep traders wary on the currency until next month's monetary policy review.

The kiwi traded at 78.14 US cents at 5pm in Wellington from 78.09 cents at 8am and 78.17 cents yesterday. The trade-weighted index was little changed at 77.99 from 78.02 yesterday.

The local currency has been trading in roughly a 2 US cents band since October, and continued weakness in global dairy prices, New Zealand's biggest export commodity, along with dwindling expectations for inflation, are likely to keep downward pressure on the kiwi. The Reserve Bank is assessing the impact of its interest rate hikes earlier this year, and will review monetary policy on Dec. 11, when it might push out the track for future increases.

"A weak milk auction and lower inflation expectations will keep the pressure downward until the MPS (monetary policy statement," said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. "The US dollar is probably going to remain reasonably strong, leaving the kiwi under pressure and as interest rates remain low."

The greenback got a boost yesterday when the government figures showed US annual growth was revised up to 3.9 percent, higher than the initial estimate of 3.5 percent.

Speizer said the local currency may trade between 77.65 US cents and 78 cents.

The kiwi rose to 91.48 Australian cents at 5pm in Wellington from 91.11 cents yesterday after Reserve Bank of Australia deputy governor Philip Lowe tried to talk down Australia's currency, saying a lower dollar would be helpful to the economy.

The kiwi was little changed at 92.06 yen from 92.12 yen yesterday, and fell to 62.68 euro cents from 62.92 cents. It edged down to 49.76 British pence from 49.87 pence.

(BusinessDesk)

Paul McBeth
Wed, 26 Nov 2014
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Dollar to stay under pressure until December MPS
43463
false