The New Zealand dollar grew sharply
12.06.2014
The decision of the Reserve Bank of New Zealand to raise interest rates was positively received by investors, the regulator gave promising signals.
On Thursday the New Zealand dollar extended gains, and this turned out to be a really sharp rise, though justified. At today’s meeting the RBNZ decided to raise the official discount rate to 3.25% per annum from 3.0% per annum. In subsequent comments, the head of the RBNZ Mr. Wheeler said that the regulator intends to continue to raise interest rates to combat rising inflationary pressures. According to him, there are some concerns about inflation, which is already under pressure from the high exchange rate.
Wheeler pointed out that the pressure increase is particularly noticeable in the sector of construction costs.
NZD did not focus on the RBNZ statements regarding excessively high rate of the national currency - in this case the verbal intervention has not worked at all. The regulator, however, has expectations that New Zealand dollar may fall with a decline in commodity prices. It is assumed that the NZD rate will gradually weaken in the next 3 years.
This is what was said officially. Formally, it turns out that the situation in the New Zealand economy looks stable, as far as is possible in the current external economic conditions. The export-oriented New Zealand economy delivers dry milk and wool to loyal customers and no fall in demand is noticeable. In such circumstances, the RBNZ may well afford to raise rates.
The official forecast assumes that over the next 12 months, the base rate will rise by 100 basis points.
The NZD/USD pair is trading with good support; the goal for purchases is at 0.8725.
RoboForex Analytical Department
On Thursday the New Zealand dollar extended gains, and this turned out to be a really sharp rise, though justified. At today’s meeting the RBNZ decided to raise the official discount rate to 3.25% per annum from 3.0% per annum. In subsequent comments, the head of the RBNZ Mr. Wheeler said that the regulator intends to continue to raise interest rates to combat rising inflationary pressures. According to him, there are some concerns about inflation, which is already under pressure from the high exchange rate.
Wheeler pointed out that the pressure increase is particularly noticeable in the sector of construction costs.
NZD did not focus on the RBNZ statements regarding excessively high rate of the national currency - in this case the verbal intervention has not worked at all. The regulator, however, has expectations that New Zealand dollar may fall with a decline in commodity prices. It is assumed that the NZD rate will gradually weaken in the next 3 years.
This is what was said officially. Formally, it turns out that the situation in the New Zealand economy looks stable, as far as is possible in the current external economic conditions. The export-oriented New Zealand economy delivers dry milk and wool to loyal customers and no fall in demand is noticeable. In such circumstances, the RBNZ may well afford to raise rates.
The official forecast assumes that over the next 12 months, the base rate will rise by 100 basis points.
The NZD/USD pair is trading with good support; the goal for purchases is at 0.8725.
RoboForex Analytical Department
Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.