NZ dollar dips below 73USc as central bank sticks to rate track view
The kiwi slipped to 72.91USc from 73.16USc yesterday. With special feature audio.
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The New Zealand dollar gave up some of its gains, dipping below 73USc, after Reserve Bank governor Graeme Wheeler backed his interest rate path as erring on the side of caution.
The kiwi slipped to 72.91USc from 73.16USc yesterday, still up from 72.68USc before Mr Wheeler's speech. The trade-weighted index was little changed at 77.24 from 77.38, still above the Reserve Bank's projection for the TWI to average 76 this quarter.
The local currency rose as high as 73.44USc after the Reserve Bank reiterated expectations for 35 basis points of further cuts to the official cash rate but pushed back against critics calling for either a pause or more aggressive action. The speech, written by Mr Wheeler and delivered by assistant governor John McDermott, said a lower rate was needed to prevent weak low inflation expectations from bedding in, but to go faster would risk promoting instability in the financial system.
The kiwi's gains "looked to be an over-reaction given the speech specifically stated it was a reiteration of themes from the recent MPS (monetary policy statement)," Bank of New Zealand market strategist Kymberly Martin said in a note. "If the $NZ/$US was to successfully break through last night's resistance it would take the currency to its highest level since May 2015."
Local data today includes July merchandise trade data at 10.45am and mortgage lending figures at 3pm.
The kiwi was little changed at 95.68Ac from 95.71Ac yesterday and fell to 4.8396 Chinese yuan from 4.8668 yuan. It traded at 64.48 euro cents from 64.57 cents and declined to 55.26 British pence from 55.64 pence. The kiwi decreased to ¥73.06 from ¥73.29 yesterday.
(BusinessDesk)
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Paul McBeth
Wed, 24 Aug 2016
Wed, 24 Aug 2016
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NZ dollar dips below 73USc as central bank sticks to rate track view
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