The New Zealand dollar rose today after yesterday’s drop, but gains were limited after the central bank said that an interest rate hike is not likely to happen this year.
The kiwi was trying to follow its Australian counterpart in gains, but it was hard to do after the Reserve Bank of New Zealand signaled that it puts interest rates on hold. The RBNZ kept its key Official Cash Rate (OCR) unchanged at 2.5 percent. Governor Graeme Wheeler was not particularly optimistic:
Domestically, the economic recovery is uneven. While demand and output are expanding, the labour market remains weak.
He also complained about the strength of NZD and the drought that the country is experiencing:
The overvalued New Zealand dollar is undermining profitability in export and import competing industries, and worsening drought conditions are creating difficulty in much of the country.
The Governor concluded:
At this point we expect to keep the OCR unchanged through the end of the year.
NZD/USD was flat at 0.8183 and NZD/JPY was up from 78.63 to 78.84 as of 10:25 GMT today.
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