The New Zealand dollar was rather volatile during today’s otherwise calm trading. The currency rallied at first, but pulled back later after the new coalition government outlined their policies and plans.
The newly formed government announced its policies, including increasing the minimal wage. That boosted the kiwi initially as investors hoped that increasing wage inflation may prompt the Reserve Bank of New Zealand to raise interest rates. But the currency retreated after it became clear that the Labour party wants to change the central bank’s mandate to include employment in addition to inflation as a dual target, making likely for the rates to stay at the current levels for a long time.
NZD/USD traded at 0.6923 as of 10:39 GMT today, trading near the lowest level since May 22, after opening at 0.6965 and rallying to the high of 0.7003 intraday. NZD/JPY slipped from 78.97 to 78.74, backing off from the daily high of 79.33.
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