NZ dollar drifts ahead of interest rate decision

File photo / NZH

The New Zealand dollar eased below US74c against the greenback today, a day out from the Reserve Bank of New Zealand's (RBNZ) review of the official cash rate (OCR).

At 5pm the NZ dollar was at US73.89c, down slightly from US74.07c at 8am and up from US73.75c at 5pm yesterday.

International travel and migration data for January today showed fewer migrants arriving, a trend economists expect to continue in the wake of the earthquake in Christchurch in February.

Finance Minister Bill English said today that growth will rebound strongly next year as the rebuilding effort gathers momentum.

The Australian dollar dipped today on weak housing data and that helped the NZ dollar to rise to A73.30c at 5pm from A72.87c at the same time yesterday.

Many economists expect the Reserve Bank to cut the OCR following the earthquake, which is estimated to have caused between $10 billion and $15 billion worth of damage.

But some economists believe there is no need for a cut and the ramifications of the earthquake can be managed by fiscal policy, rather than monetary policy.

The central bank is seen as being in uncharted territory as it was when making decisions during the global financial crisis, and while it is independent Prime Minister John key has twice expressed a wish that the OCR should fall.

It is also making its decision at a time of considerable global uncertainty. Investors are on edge about unrest in Libya and are worried that high oil prices could stall the global economic recovery.

The NZ dollar rose to 0.5319 euro from 0.5275 yesterday, and lifted to 61.17 yen from 60.67 at 5pm.

The trade weighted index was at 65.40 at 5pm from 65.01 at the same time yesterday.

- NZPA