NZ dollar rises ahead of RBNZ review that's expected to keep rates on hold

Thursday 23rd March 2017

The New Zealand dollar gained ahead of the Reserve Bank's six-weekly review of monetary policy, which is expected to see the benchmark interest rate kept unchanged at a record low.

The kiwi rose to 70.50 US cents as at 8am in Wellington from 70.30 cents late yesterday. The trade-weighted index rose to 76.44 from 76.25.

Governor Graeme Wheeler flagged no change in interest rates through until 2019 in the monetary policy statement last month and analysts expect him to reiterate that view in the one-page assessment due for release at 9am today. The market has been dialling back expectations that Wheeler will begin hiking faster than the central bank's track for the official cash rate implies in the face of economic data suggesting some steam may be coming out of the local economy.

"The market has lost some faith that the RBNZ will be ready to hike this year," said Jason Wong, currency strategist at Bank of New Zealand. The central bank statement "ought to be a non-event, with the bank likely unwilling to drop its neutral policy stance despite most folk outside the bank believing overwhelmingly that the next move is much more likely to be a hike than a cut."

The kiwi dollar rose to 56.52 British pence from 56.36 pence late yesterday. It earlier reached as high as 56.74 pence as reports began to emerge of what British police are calling a terror attack after a car ploughed into pedestrians in London, killing four and injuring 20, while in a second attack a policeman was stabbed near the British parliament.

The New Zealand dollar traded at 91.91 Australian cents from 91.85 cents, fell to 78.37 yen from 78.48 yen and rose to 4.8521 yuan from 4.8394 yuan. It rose to 65.35 euro cents from 65.11 cents.

BusinessDesk.co.nz

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