New Zealand Dollar (NZD) Exchange Rate Rallies ahead of RBNZ Decision
After climbing in the aftermath of the European Central Bank’s rate decision, the New Zealand Dollar consolidated gains against the Pound and US Dollar as investors focused on the upcoming Reserve Bank of New Zealand policy meeting.
If you're looking to make an international money transfer, we recommend TorFX.
The appeal of the New Zealand Dollar was also boosted by an unexpectedly strong increase in Chinese exports and better-than-forecast Japanese growth figures.
As it stands the Pound to New Zealand Dollar exchange rate is up by 0.15 per cent, but the ‘Kiwi’ is slightly stronger against its static US counterpart, achieving a high of 1.1741 before the RBNZ delivers its all important rate announcement.
Sterling has advanced against several of its peers today in response to an upbeat Lloyds business confidence survey and the International Monetary Fund admitting it was wrong to doubt the UK’s austerity measures.
Further Pound gains could occur this week if we witness the publication of a strong UK employment report on Wednesday, but the GBP/NZD exchange rate will be feeling the pressure before the RBNZ announcement.
New Zealand’s central bank has hiked interest rates twice this year as New Zealand’s robust economic recovery continues and the global outlook improves.
The RBNZ is expected to increase the official cash rate again when it gathers on Thursday, raising it to 3.25 per cent.
However, there has been some debate as to whether the central bank will reconsider its rate hike path in light of the historically high New Zealand Dollar and slowdown concerns in China.
According to industry expert Mark Johnson; ‘Market pricing is quite a bit below where the RBNZ’s track is. The Reserve Bank is trying to prep the market for a normalisation of rates.’
The RBNZ Governor Graeme Wheeler may also attempt to talk down the ‘Kiwi’ by reiterating the adverse impact a strong local currency has on the domestic export outlook.
While the RBNZ announcement is certainly the week’s biggest news for New Zealand, further movement in the nation’s currency could be caused by domestic manufacturing activity figures, card spending data and food price figures.
Global economic developments, such as Australia and the UK’s employment figures and US advance retail sales data may also impact the New Zealand Dollar’s exchange rate.
The New Zealand Dollar is currently trading against the British Pound in the region of 0.5033 and is trading against the US Dollar in the region of 0.8438.