The New Zealand dollar gave up some of yesterday's gains as investors digested comments from Reserve Bank Governor Graeme Wheeler that he would raise interest rates more aggressively should lending limits fail to cool the bubbling house market.
The kiwi declined to 82.91 US cents at 8am in Wellington from 83.06 cents yesterday. The trade-weighted index fell to 76.81 from 77.04 yesterday.
The local currency retraced some of its gain after jumping about half a cent yesterday following comments by Wheeler that the central bank expects to increase the 2.5 per cent official cash rate by 2 per cent from 2014 to the beginning of 2016 but would make larger increases should the loan-to-value limits fail to slow house price inflation.
"The impact of the Reserve Bank LVR comments yesterday appear to be waning," said Alex Sinton, senior dealer at ANZ New Zealand. "The reality is they are talking about a two-year window for raising rates at 2 per cent and possibly quicker moves off the back of house prices."
"Everybody will still be monitoring data that comes out of that market and trying to make a call on things but they didn't really say anything new in our mind, nothing that we hadn't already seen, heard and digested," Sinton said. "I suspect it might be a bit of a neutral day today with 82.70 support and 83.20 resistance."
