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13 Apr 2015
RBNZ rate cuts needs to weaken the NZD – BTMU
FXStreet (Barcelona) - According to Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, the NZD remains close to record highs on a trade-weighted basis, and RBNZ might be required to cut rates to marginally weaken the kiwi.
Key Quotes
“The New Zealand dollar has been marginally undermined in the Asian trading session following comments from New Zealand Prime Minister Key over the weekend stating that the RBNZ has been consulting on changes that may lead to increased borrowing costs for property investors, although it is not something that is imminent.”
“He added that those alternative tools in the toolbox are much better than blanket and wholesale rises of interest rates which wouldn’t be justifiable given where inflation is at the momentum.”
“The implementation of alternative measures to dampen the domestic housing market which reduce the need for higher interest rates would also help to dampen New Zealand dollar strength. However, RBNZ rate cuts will likely be needed to more materially weaken the New Zealand dollar.”
“The New Zealand dollar still remains close to a record high on trade-weighted basis with the AUD/NZD rate moving closer to parity.”
Key Quotes
“The New Zealand dollar has been marginally undermined in the Asian trading session following comments from New Zealand Prime Minister Key over the weekend stating that the RBNZ has been consulting on changes that may lead to increased borrowing costs for property investors, although it is not something that is imminent.”
“He added that those alternative tools in the toolbox are much better than blanket and wholesale rises of interest rates which wouldn’t be justifiable given where inflation is at the momentum.”
“The implementation of alternative measures to dampen the domestic housing market which reduce the need for higher interest rates would also help to dampen New Zealand dollar strength. However, RBNZ rate cuts will likely be needed to more materially weaken the New Zealand dollar.”
“The New Zealand dollar still remains close to a record high on trade-weighted basis with the AUD/NZD rate moving closer to parity.”