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

NZ dollar drifts as rate review looms

NZ NewswireNZ Newswire 25/04/2016 Paul McBeth

The New Zealand dollar was little changed as investors remain cautious ahead of Thursday when the Reserve Bank joins the US Federal Reserve and Bank of Japan in reviewing monetary policy.

The kiwi traded at 68.45 US cents at 8am in Wellington from 68.57 cents at 5pm on Monday when it was unchanged from the New York close on Friday. The trade-weighted index declined to 72.27 from 72.50 last week.

Traders are pricing in a 55 per cent chance Reserve Bank governor Graeme Wheeler will cut the official cash rate to 2 per cent on Thursday to try and spur inflation back within his 1 per cent-to-3 per cent target band.

Potentially easing some of the tension Mr Wheeler faces when judging whether a rate cut would overheat the nation's bubbling housing market, Prime Minister John Key said his government is looking at introducing a land tax on overseas property buyers,

The US Federal Open Market Committee will review its policy the same day and is expected to keep its gradual path to higher rates intact, while speculation is mounting that the Bank of Japan may expand its asset purchase programme.

"No one is really certain what the RBNZ will do," BNZ's Jason Wong said.

"Our out-of-consensus call for the RBNZ to cut rates and keep the door open for more would help the NZD soften on the day, while the bank remaining on the sidelines could encourage a move to retest the 0.70 (US cents) handle."

The kiwi fell to 47.28 British pence from 47.47 pence and declined to 60.77 euro cents from 60.94 cents as the British pound rose to a two-month high on dwindling expectations the UK will quit the euro-zone.

The local currency was stable at 76.13 yen from 76.10 yen, slipped to 88.79 Australian cents from 88.97 cents and it decreased to 4.4450 Chinese yuan from 4.4567 yuan.

image beaconimage beaconimage beacon