Eyes on Bollard as NZ currency skyrockets
Reserve Bank Governor Alan Bollard will leave interest rates alone when he reviews the official cash rate this morning – but he may have something to say about New Zealand's rising currency.
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Reserve Bank Governor Alan Bollard will leave interest rates alone when he reviews the official cash rate this morning – but he may have something to say about New Zealand’s rising currency.
Yesterday the New Zealand dollar moved above 81USc and although it dropped after that and was at 80.77USc at the end of the day, it is still at heights not seen since 2007 - before the recession.
Dr Bollard’s rate review is not accompanied by a press conference but the prepared statement may have a guide as to where the central bank thinks the currency should be. A warning that the currency does not reflect New Zealand’s economic realities would see a drop: a statement that New Zealand exporters will have to learn to live with a higher rate is likely to shove it even higher.
The rises are driven by the weakness of the US economy, rather than the strength of New Zealand’s, although yesterday’s unexpectedly upbeat National Bank business confidence survey also gave the currency a nudge upwards. Against other currencies New Zealand has not been running so high, and it actually fell slightly against the Euro and the Australian dollar over night.
DR Bollard’s statement is also to be released just after the US Federal Reserve reviews its interest rates and this could see the New Zealand/US cross rate move significantly one way or another.
The Reserve Bank's announcement will be at 9am.
Rob Hosking
Thu, 28 Apr 2011
Thu, 28 Apr 2011
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
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Eyes on Bollard as NZ currency skyrockets
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