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Kiwi weaker before cash rate review

NZ Newswire logoNZ Newswire 21/06/2017

The local currency traded at US72.16c from US72.37c at 8am and 72.46c Tuesday. © Getty Images The local currency traded at US72.16c from US72.37c at 8am and 72.46c Tuesday. The New Zealand dollar was slightly weaker on Wednesday as markets anticipate the central bank will attempt to jawbone it lower in Thursday's official cash rate review.

It is expected to keep rates on hold at 1.75 per cent.

The local currency traded at US72.16c from US72.37c at 8am and 72.46c Tuesday.

"There's a bit of waiting for tomorrow with the RBNZ out at 9am and there is a bit of expectation building that the RBNZ will step up its rhetoric directed at a currency, which is a factor weighing on the kiwi a bit," said ANZ Bank senior economic Phil Borkin.

The kiwi is much higher than the central bank anticipated but Mr Borkin said it will be hard pressed to say it is "unjustifiably" high.

"It's higher than they would like, it complicates the outlook for inflation, but when you have the terms of trade effectively at all time highs there are some fundamental reasons why the currency is strong. It's hard from for them to talk the currency down too aggressively," he said.

While New Zealand's first quarter gross domestic product disappointed markets, Mr Borkin said he expects growth to rebound in the next quarter and noted that other data - like consumer and business confidence - remain very positive.

He said the currency largely took the dairy auction in stride after prices fell 0.8 per cent in the trade-weighted index's first decline since March.

The kiwi was trading at 57.12 British pence after climbing as high as 57.42 British pence overnight - the highest since March 6. It traded at 64.83 euro cents from 65.01 cents.

It was at A95.49c from 95.32c as the Aussie was hurt by multi-month lows in oil prices. The kiwi traded at 80.31 yen from 80.93 yen yesterday and traded at 4.9281 from 4.9498 yuan.

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