24 Apr 2014
Kiwi feels stronger - BTMU
FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, remarks the strength of the NZD after the RBNZ hike.
Key Quotes
"The New Zealand dollar has strengthened in the Asian trading session with the NZD/USD rate rising back above the 0.8600-level. The kiwi has further extended its lead as the strongest performing G10 currency so far during 2014."
"The New Zealand dollar has derived support overnight from the RBNZ’s decision to raise its key policy rate for the second consecutive meeting by 0.25 point to 3.00%. The RBNZ also raised its real GDP estimate for the year ended in March to 3.5% from 3.3%."
"The robust pace of economic growth in New Zealand is serving to increase inflation pressures, which are expected to increase further over the next two years. As a result the RBNZ wants to raise interest rates towards a level which is no longer adding to demand with the neutral level estimated at around 4.50% signalling that the rate hike cycle has much further to run."
"However, RBNZ rate hike expectations are further strengthening the New Zealand dollar reinforcing the tightening in overall monetary conditions. The RBNZ acknowledged in today’s statement that “the speed and extent to which the OCR will be raised will depend upon economic data and our continuing assessment of emerging inflationary pressures, including the extent to which the high exchange rate leads to lower inflationary pressure”."
"It is a clear signal that a further strengthening of the New Zealand dollar may dampen the need for RBNZ rate hikes in the years ahead, potentially disappointing market expectations that the OCR will be raised towards 4.50% by the end of 2015. The RBNZ also reiterated that the current elevated level of the exchange rate is unsustainable while noting that auction prices for dairy products have declined by 20% in recent months."
Key Quotes
"The New Zealand dollar has strengthened in the Asian trading session with the NZD/USD rate rising back above the 0.8600-level. The kiwi has further extended its lead as the strongest performing G10 currency so far during 2014."
"The New Zealand dollar has derived support overnight from the RBNZ’s decision to raise its key policy rate for the second consecutive meeting by 0.25 point to 3.00%. The RBNZ also raised its real GDP estimate for the year ended in March to 3.5% from 3.3%."
"The robust pace of economic growth in New Zealand is serving to increase inflation pressures, which are expected to increase further over the next two years. As a result the RBNZ wants to raise interest rates towards a level which is no longer adding to demand with the neutral level estimated at around 4.50% signalling that the rate hike cycle has much further to run."
"However, RBNZ rate hike expectations are further strengthening the New Zealand dollar reinforcing the tightening in overall monetary conditions. The RBNZ acknowledged in today’s statement that “the speed and extent to which the OCR will be raised will depend upon economic data and our continuing assessment of emerging inflationary pressures, including the extent to which the high exchange rate leads to lower inflationary pressure”."
"It is a clear signal that a further strengthening of the New Zealand dollar may dampen the need for RBNZ rate hikes in the years ahead, potentially disappointing market expectations that the OCR will be raised towards 4.50% by the end of 2015. The RBNZ also reiterated that the current elevated level of the exchange rate is unsustainable while noting that auction prices for dairy products have declined by 20% in recent months."