Sharechat Logo

NZ dollar rises after RBNZ says unconventional policy unlikely

Thursday 26th September 2019

Text too small?

The New Zealand dollar rose after Reserve Bank governor Adrian Orr said the central bank is unlikely to use unconventional monetary policy measures like those used by the Federal Reserve and European Central Bank.

The kiwi was trading at 63.06 US cents at 5pm in Wellington from 62.75 cents at 8am. The trade-weighted index was at 70.37 from 70.06.

Orr told an NZX issuer forum in Auckland today that the global low interest rate environment is raising new challenges for central banks, including the possibility of negative interest rates and alternative monetary policy strategies.

 

“We are currently thinking hard about these questions, because it makes sense to do so as a precaution – it’s best to put the roof on when the sun is shining," Orr said.

"Our current view is that we are unlikely to need ‘unconventional’ monetary policy tools. But we would be remiss not to be prepared.”

The head of foreign exchange sales at Commonwealth Bank of Australia, Tim Kelleher, said the market reacted positively to Orr's comments.

"It's a wind-back of what he's said previously."

The currency was still lower than this time yesterday, when it was trading at 63.22 US cents, and Kelleher says that reflects the fact that the market is short US dollars.

The Federal Reserve Bank of New York stepped in overnight to provide short-term cash loans to financial firms to ease the shortage, according to the Wall Street Journal.

Kelleher says the impact of the shortage is likely to be short-lived and the market should settle after the end of the month, which is also the end of the September quarter.

US President Donald Trump's comments that a deal to end his 15-month trade war with China could happen sooner than people think also helped improve sentiment, Kelleher says.

Trump told reporters that the Chinese are making big agricultural purchases from the US, including beef and pork, and that “they want to make a deal very badly... It could happen sooner than you think.”

The New Zealand dollar was at 93.21 Australian cents from 92.91, at 50.97 British pence from 50.77, at 57.51 euro cents from 57.32, at 67.89 yen from 67.61, and at 4.4910 Chinese Yuan from 4.4749.

The two-year swap rate nudged up to a bid price of 0.9463 percent from 0.9398 yesterday while 10-year swaps rose to 1.2100 percent from 1.2000.

(BusinessDesk)



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Scott Technology Trading Update; Rising to the COVID Challenge
New non-binding indicative offer received from apvg, shareholder meeting deferred
U.S. Added 4.8 Million Jobs in June as Reopened Businesses Rehired
Auditors have a duty to be alert to fraud
Strong sales recovery but uncertainty remains over economic outlook and potential second wave of COVID-19
Auditors keep falling into the same trap
The great interruption continues
Update on Clutha Upper Waitaki Lines Project
Napier Port Welcomes Inland Port Funding
Auckland Airport provides details of Other Significant Items expected to impact 2020 financial results and an update on further organisational change

IRG See IRG research reports