The New Zealand dollar dropped on the last trading day of this week as Reserve Bank Governor Graeme Wheeler said that the exchange rate is too strong and it prevents raising interest rates “at the moment”.
Previously, the RBNZ has suggested in its policy statement that an interest rate hike is likely in 2014. Indeed, Wheeler confirmed in an interview with Radio New Zealand that policy makers are planning to start monetary tightening next year. Yet he also complained about the current strength of the currency, which is near historic highs, and said:
So increasing interest rates, to some extent it’s built into investor portfolios expectations, if you like, or the expectations of investors, but it would put upward pressure on the exchange rate and damage our traded goods sector and we’re quite concerned about that risk.
Such comments hurt the kiwi, which was already soft, leading to the third day of decline.
NZD/USD slid from 0.8352 to 0.8282 and NZD/JPY dropped from 81.24 to 80.66. AUD/NZD climbed from 1.1510 to 1.1566.
If you have any questions, comments or opinions regarding the New Zealand Dollar,
feel free to post them using the commentary form below.
