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Kiwi lifts off 11-month low

NZ Newswire logoNZ Newswire 11/05/2017 Paul McBeth

The New Zealand dollar has risen from an 11-month low in the wake of the Reserve Bank's monetary policy review where it kept its projection for interest rates to be unchanged until late 2019.

The kiwi rose to US68.55 cents as at 8am on Friday in Wellington from as low as US68.19c overnight and from US68.34c late Thursday.

The trade-weighted index was at 74.84 from 74.74, below the RBNZ's latest projected average for the TWI in the June quarter of 76.

Reserve Bank governor Graeme Wheeler on Thursday kept the official cash rate at 1.75 per cent and kept the projected track unchanged from its February statement, surprising some in the market who had been expecting the bank to adopt a mild tightening bias after a spike in oil and food prices pushed inflation above forecast in the first three months of the year.

"Right now, it seems quite clear that the RBNZ has far more confidence to deal with an inflation overshoot than the opposite, especially at a time when policy is already being tightened through the banking sector," ANZ economist Phil Borkin said.

"In thinking about the near-term NZD outlook, the RBNZ's stance is clearly something that could act as a topside cap (even though its own explicit view on the NZD has turned far more relaxed)."

On Friday morning, the kiwi rose to 53.18 British pence from 52.81p after the Bank of England governor Mark Carney said rates may have to rise earlier than some in the market anticipate. The UK central bank kept the benchmark rate at 0.25 per cent.

The local currency gained to 63.08 euro cents from 62.86c and traded at 78.04 yen from 78.02 yen. It fell to 92.79 Australian cents from A93.02c and increased to 4.7288 Chinese yuan from 4.7167 yuan.

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