You are using an older browser version. Please use a supported version for the best MSN experience.

NZ dollar climbs above 73 US cents

NZ NewswireNZ Newswire 23/08/2016 Jonathan Underhill

© Bloomberg The New Zealand dollar rose above 73 US cents after Reserve Bank governor Graeme Wheeler signalled no change in the stance of monetary policy, disappointing some in the market that had expected a more dovish tone to Tuesday's speech.

The kiwi rose to 73.16 US cents as at 5pm in Wellington and touched 73.25 cents immediately after the speech was released at 9am NZ time, from 72.16 cents on Monday. The trade-weighted index rose to 77.38 from 76.64.

In a speech to the Otago Chamber of Commerce, written by Wheeler and delivered by assistant governor John McDermott, the central bank reiterated that it saw 35 basis points of further cuts to the official cash rate while pushing back against critics who have called for either deeper cuts or no change to rates.

Wheeler is being forced to defend monetary policy because inflation has undershot the policy targets agreement for almost two years, Auckland property prices are continuing to rise and the kiwi dollar, as usual, is tracking above the average rate the bank projected in its latest forecasts.

"It's fair to say that the market was probably expecting something on the dovish side so a short market was squeezed higher because they were disappointed," said Mark Johnson, senior dealer at OMF.

Johnson said the kiwi will probably remain in its recent range of about 70.5 US cents to 73.5 cents through this week, ahead of Federal Reserve chair Janet Yellen's speech at the Jackson Hole central bankers' retreat next weekend. Like the RBNZ, the Fed has struggled to clearly telegraph the pace and direction of monetary policy.

The local currency rose to 95.71 Australian cents from 95 cents on Monday and rose to 4.8668 yuan from 4.8072 yuan. It rose to 64.57 euro cents from 63.96 cents, rose to 55.64 British pence from 55.34 pence and gained to 73.29 yen from 72.77 yen.

New Zealand's two-year swap rate fell 2 basis points to 1.97 per cent and 10-year swaps fell 4 basis points to 2.42 per cent.

image beaconimage beaconimage beacon