Kiwi pares gain against yen after BoJ disappoints, RBNZ looms
Some investors were looking for more stimulus to help settle an increasingly volatile bond market.
The New Zealand dollar pared gains against the yen after the Bank of Japan maintained the size of its asset purchase programme, disappointing some investors looking for more stimulus to help settle an increasingly volatile bond market.
The kiwi traded at 77.34 yen at 5pm in Wellington from 77.97 yen at 8am, up from 77.04 yen yesterday. The local currency traded at 78.80 US cents at 5pm from 78.96 cents at 8am and 78.30 cents yesterday.
Japan's central bank kept its benchmark interest rate near zero and held the size of its plan to increase the nation's monetary base by 60 trillion yen to 70 trillion yen, quashing hopes it might act to help quell a volatile bond market.
The yen strengthened to 98.20 per US dollar at 5pm in Wellington from 98.78 before the announcement, the Nikkei 225 index dropped 1.1 percent in afternoon trading and the yield on Japanese 10-year government bonds rose 2.4 basis points to 0.871 percent.
The Bank of Japan's meeting comes ahead of New Zealand's central bank meeting on Thursday, where governor Graeme Wheeler is expected to keep the official cash rate at 2.5 percent. Mr Wheeler has been contending with a strong currency debasing imported inflation and a threatening property bubble, which could potentially fuel inflation.
The kiwi has plunged 7 percent since the bank last reviewed monetary policy on April 24 and traders will be looking to see what the governor has to say about the currency.
"The kiwi's waiting for the Reserve Bank on Thursday," says Tim Kelleher, head of institutional FX sales NZ at ASB Institutional. "There's pretty strong support around 78 US cents and I'm a little less inclined to be bearish" preferring instead to sell on rallies.
The kiwi advanced to 83.69 Australian cents at 5pm in Wellington from 83.19 cents yesterday slipped to 59.33 euro cents from 59.41 cents. It rose to 50.56 British pence from 50.41 pence and the trade-weighted index gained to 73.76 from 73.52 yesterday.
(BusinessDesk)
Paul McBeth
Wed, 11 Jul 2018
Wed, 11 Jul 2018
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Kiwi pares gain against yen after BoJ disappoints, RBNZ looms
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