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NZD level ahead of expected unchanged OCR

NZ Newswire logoNZ Newswire 21/06/2017

The New Zealand dollar has barely budged heading into the Reserve Bank's latest policy review which is expected to keep the official cash rate at 1.75 per cent and retain a neutral bias on the outlook.

The kiwi traded at US72.25 cents as at 8am on Thursday in Wellington from US72.16c on Wednesday.

Central bank governor Graeme Wheeler is seen sticking to his existing policy script when he announces his latest review on Thursday morning.

The bank has a neutral bias although many economists expect interest rates to rise well ahead of the central bank's latest projections, which have just one quarter-point hike by 2020.

The RBNZ rates review "is widely expected to repeat May's policy guidance that the OCR will remain at 1.75 per cent for a long time," said Westpac senior markets strategist Imre Speizer.

"Risks are slightly skewed in a dovish direction."

On Thursday morning, the kiwi slipped to 57.05 British pence from 57.12p after Bank of England chief economist Andy Haldane said he was ready to vote for an increase in UK interest rates "relatively soon", comments that contributed to a broadly stronger pound.

The kiwi also traded at 80.45 yen from 80.31 yen and rose to 4.9329 yuan from 4.9281 yuan. It rose to 95.61 Australian cents from A95.49c and fell to 64.71 euro cents from 64.83c.

The trade-weighted index was at 77.99 from 77.94.

BNZ currency strategist Jason Wong said in a note that there was a risk Thursday's OCR review will include concern about the strong kiwi dollar, which on a trade-weighted basis is 2.6 per cent higher than the 76 level the RBNZ projected as the average for the second quarter is last month's monetary policy statement.

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