Currency: Kiwi gains on hawkish MPS

The New Zealand dollar gained slightly against the greenback after the Reserve Bank (RBNZ) today issued a hawkish monetary policy statement (MPS).

At 5pm, the kiwi was buying US71.42c, after beginn ning today's session at US71.11c. It closed at US71.54c yesterday.

RBNZ governor Alan Bollard this morning held the official cash rate at 6.75 per cent, but was hawkish in saying there was no scope to cut rates in the "foreseeable" future.

"With inflation projected to remain around 3 per cent through most of this year and next, a firm policy stance will be required for some time," he said.

BNZ currency strategist Sue Trinh said the kiwi fell to US70.95c in the immediate aftermath of the MPS, some market watchers reading the first part of the MPS as dovish.

But, once the market saw the hawkish tone the kiwi firmed, hitting an intra-day high of US71.65c, Ms Trinh said.

Yesterday, the Reserve Bank of Australia (RBA) opted to keep its own key interest rate unchanged at 5.5 per cent.

On its other major crosses at 5pm the kiwi was buying A93.11c (A93.11) 0.5836 euro (0.5809 at 5pm yesterday), 76.59 yen (76.43), 39.09 British pence (38.95), and 0.8952 Swiss francs (0.8896).

The trade-weighted index was at 71.25 (71.18), while the monetary conditions index was at plus 1110 (1106).

Meanwhile, at 5pm the aussie was at US76.71c (US76.83c), the euro was buying US$1.2238 (US$1.2225) and the greenback was buying 107.21 yen (106.81) .

On the money markets at 8am, 90-day bank bill yields were at 7.03 per cent (7.04), July 2009s were at 5.77 per cent (5.75) and April 2015s were at 5.65 per cent (5.63).

- NZPA