The New Zealand dollar firmed slightly today after the Reserve Bank governor reiterated his hawkish views on potential rate hikes.
Speaking at the release of the Reserve Bank's Financial Stability Report, RB governor Alan Bollard said the bank's view on interest rates had not changed since its March monetary statement. In March the bank left the official cash rate unchanged at 6.75 per cent but did not rule out further monetary tightening.
Westpac currency strategist Johnathan Bayley said Dr Bollard seemed very keen to reiterate that message today after the recent release of weaker than expected economic data, including rising unemployment numbers and slowing retail sales, stripped out a lot of price policy risk last week.
"It (today's speech) was a very deliberate reminder from the Governor and one the market has most certainly taken on board," he said.
The kiwi jumped about 25 points after Dr Bollard's talk. The kiwi ended today's local session at US70.99c, from US70.64 at 8.30am and US70.75c at 5pm last night.
Against the aussie at 5pm the kiwi was buying A93.63c (A93.43c at 5pm yesterday), while on its other crosses the kiwi was buying 0.5619 euro (0.5612), 76.01 yen (76.15), 38.60 British pence (38.28), and 0.8681 Swiss francs (0.8670).
The greenback was buying 107.05 yen (107.64) at 5pm in Wellington while the euro was buying US$1.2634 (US$1.2607), and the aussie was at US75.83c (US75.72c).
The trade-weighted index was at 70.37 (70.21), while the monetary conditions index was at plus 1051 (1038).
On the money markets, 90-day bank bill yields were at 7.06 per cent (7.04), July 2009 bonds were unchanged at 5.89 per cent and April 2015s were at 5.80 per cent (5.78).
- NZPA
<EM>Currency:</EM> Kiwi firms as Bollard remains hawkish
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