NZD FUNDAMENTAL : New Zealand Dollar Rallies after RBNZ Confirms Intention to Hike in 2014 In the wake of key event risk, the New Zealand dollar is up against all of its counterparts through early Thursday trade. The impetus for this kiwi climb was the Reserve Bank of New Zealand (RBNZ) rate decision. Though the central bank did not budge on its 2.50 percent benchmark lending rate – as expected by the broader market – the policy authority did offer fodder for speculators to price in tightening through the foreseeable future. Between the policy statement and Governor Graeme Wheeler’s press conference, the comment that most FX traders honed in on was the admission of plans to raise rates in 2014. While that does not meet the level of speculation that we seen in rates market (swaps are pricing in 90 bps of hikes over 12 months), it acts as vindication for the more aggressive prognostications. Meanwhile, regular lamentations about an overvalued currency are overlooked. Active intervention has failed, so ‘jawboning’ has no hope.
Posted on: Thu, 12 Sep 2013 07:02:04 +0000
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