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Kiwi rises ahead of OCR 'non-event'

NZ Newswire logoNZ Newswire 22/03/2017 Jonathan Underhill

The New Zealand dollar has gained ahead of the Reserve Bank's six-weekly review of monetary policy, which is expected to see the benchmark interest rate kept unchanged at a record low.

The kiwi rose to US70.50 cents as at 8am on Thursday in Wellington from US70.30c late on Wednesday. The trade-weighted index rose to 76.44 from 76.25.

Bank governor Graeme Wheeler flagged no change in interest rates through until 2019 in the monetary policy statement last month and analysts expect him to reiterate that view in the one-page assessment due for release at 9am on Thursday.

The market has been dialling back expectations that he will begin hiking faster than the central bank's track for the official cash rate implies in the face of economic data suggesting some steam may be coming out of the local economy.

"The market has lost some faith that the RBNZ will be ready to hike this year," said BNZ currency strategist Jason Wong.

The central bank statement "ought to be a non-event, with the bank likely unwilling to drop its neutral policy stance despite most folk outside the bank believing overwhelmingly that the next move is much more likely to be a hike than a cut".

On Thursday morning, the kiwi rose to 56.52 British pence from 56.36p late Wednesday. It earlier reached as high as 56.74p as reports began to emerge of what British police are calling a terror attack after a car ploughed into pedestrians in London, killing four and injuring 20, while in a second attack a policeman was stabbed near the British parliament.

The New Zealand dollar traded at 91.91 Australian cents from A91.85c, fell to 78.37 yen from 78.48 yen and rose to 4.8521 yuan from 4.8394 yuan. It rose to 65.35 euro cents from 65.11c.

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