The Reserve Bank kept interest rates unchanged today, but the prospect of further hikes this year pushed the New Zealand dollar higher.
BNZ currency strategist Sue Trinh said while the market had expected the official cash rate (OCR) to remain stable at 6.75, today's commentary by the RB Governor, Allan Bollard, was surprisingly hawkish.
At the six-weekly OCR review today Dr Bollard did not rule out further rate hikes this year and all but closed the door on a near-term cut.
"Certainly, the current outlook offers no scope for an easing in the foreseeable future," he said in his commentary.
Immediately after the 9am announcement the kiwi bounced up from just over US72c to US72.32c. It hit an intraday high of US72.66c before settling back to US72.60c by 5pm.
On its other major crosses at 5pm today the kiwi was buying A93.35c (A93.00c at 5pm yesterday), 0.5615 euro (0.5570), 76.89 yen (76.69), 38.11 British pence (37.90), and 0.8652 Swiss francs (0.8588).
The trade-weighted index was at 70.88 (70.52), and the monetary conditions index was at plus 1083 (1058).
Meanwhile the euro was at $US1.2932 ($US1.2967 at 5pm yesterday), while the greenback was buying 105.92 yen (106.19) and the Australian dollar was at US77.76c (US77.66c).
On the money markets the 90-day bank bill yields were unchanged at 7.02 percent, July 2009 bonds were at 5.94 percent (5.95) and April 2015s were at 5.88 percent (5.89).
- NZPA
<EM>Currency:</EM> Kiwi gains despite static interest rates
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